SMAIL IMPORTS, INC. v. RMJ, MOTORS, INC

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

SMAIL IMPORTS, INC., et al., )

)

) 2:20-cv-109-NR

Plaintiffs, )

)

v. )

)

RMJ, MOTORS, INC, et al., )

)

)

Defendants. )

OPINION

J. Nicholas Ranjan, United States District Judge

This case arises from a failed transaction for the sale of a car dealership and

the land on which it is located. The dealership at issue is a Hyundai dealership in

Greensburg, Pennsylvania, owned by Defendant RMJ Motors; (Defendant NR Realty

owns the land). In July 2019, RMJ agreed to sell the Hyundai dealership to the lead

plaintiff, Smail Imports.1 The sale of the dealership was contingent, however, on

Defendant Hyundai Motor America approving the transaction. Things went south

when Hyundai sat on the approval paperwork for longer than expected, prompting

RMJ to pull out of the deal, and terminate its agreement with Smail. As a result,

Smail filed this lawsuit, alleging that RMJ’s termination of the agreement was

invalid, and that Hyundai should be deemed to have consented to the sale by

operation of the Pennsylvania Board of Vehicles Act.

Now, following discovery, all parties cross-move for summary judgment and

agree that no material disputes of fact exist. After careful consideration, the Court

1 Simultaneously, and conditioned on the closing of the sale of the dealership, NR

Realty agreed to sell the land on which the dealership is located to Plaintiff LMJ II.

will grant Defendants’ motions, deny Smail’s motion, and enter final judgment in

favor of Defendants, for three main reasons.

First, Hyundai did not violate the Pennsylvania Board of Vehicles Act and

cannot be deemed to have consented to the sale by operation of law. The Board of

Vehicles Act places strict time limitations on how long a manufacturer like Hyundai

can consider an application for the sale of a dealership before its silence will be

deemed to be consent to the sale. Importantly, however, the manufacturer’s

deadlines are only triggered once the applicant has provided the manufacturer all the

information initially required. Here, Smail failed to initially provide Hyundai with

certain financial statements that Hyundai required from the outset. While Smail

eventually provided the financial statements, the statutory clock did not begin to run

until Smail provided that information to Hyundai—meaning the clock started

running much later than Smail argues. As a result, RMJ terminated the agreement

with Smail well before the Act’s statutory deadlines expired and Hyundai could be

deemed to have approved the deal.

Second, RMJ properly terminated its agreement with Smail. The main

agreement here was an asset purchase agreement. It gave both sides the right to

terminate the agreement if certain conditions had not been satisfied within 75 days

of the agreement’s execution. While Smail and RMJ dispute as to what exactly the

requisite conditions were, RMJ properly terminated the agreement under either

party’s reading of the contract. Specifically, even under Smail’s proposed

interpretation of the termination conditions—which purportedly required Smail to

finish submitting its application to Hyundai within 75 days of the agreement’s

execution—RMJ properly terminated the agreement when Smail did not finish

submitting its application to Hyundai within the 75-day period, due to the missing

financial statements referenced above.

Third, RMJ did not breach any of its obligations before terminating the

agreement. In arguing otherwise, Smail faults RMJ for not doing more to obtain

Hyundai’s approval and for not notifying Smail of its concerns. Smail argues that

RMJ thus breached its contractual obligation to make all “commercially reasonable”

efforts to close the deal as required by the agreement. But fatal to Smail’s arguments,

once RMJ’s termination rights arose, those rights superseded any such obligations on

RMJ’s part. As well, the (in)actions Smail faults RMJ for failing to take were not

“commercially reasonable” under the circumstances. The approval process necessary

to close the deal was between Smail and Hyundai. That is, Smail was responsible for

applying to Hyundai for approval and, further, Smail possessed all of the information

that Hyundai required. It would not be commercially reasonable, as a matter of law,

to impose additional obligations on RMJ, not articulated in the contract, given that

RMJ bore substantially higher information and transaction costs relative to Smail in

obtaining Hyundai’s approval. Further, RMJ had no obligation, under either the

parties’ agreement or Pennsylvania common law, to provide advance notice to Smail

before terminating the agreement.

For these reasons, discussed in full below, the Court will grant Defendants’

motions and enter final judgment in their favor.

BACKGROUND

Smail Auto Group and RMJ each operate car dealerships. ECF 60-3, pp. 9:21-

11:15; ECF 60-1, pp. 8:4-10:6. RMJ’s dealerships include a Hyundai franchise in

Greensburg, Pennsylvania. ECF 60-1, p. 10:3-12. And NR Realty owns the land on

which the Hyundai dealership is located. ECF 55-2, PDF p. 2 (Recitals, ¶ C). In

2019, RMJ agreed to sell its Hyundai dealership and assets to Smail. ECF 55-2. To

effectuate this transaction, Smail Auto Group formed the entity Smail Imports, Inc.

(the lead named Plaintiff)2 on June 19, 2019. ECF 56-7, PDF p. 188.

On July 24, 2019, Smail and RMJ entered into the Asset Purchase Agreement,

detailing Smail’s purchase of the Hyundai dealership from RMJ. ECF 55-2.

Simultaneously, Plaintiff LMJ and Defendant NR Realty reached an agreement for

LMJ to purchase from NR Realty the land on which the dealership is located. ECF

55-3. This Real Property Agreement was made contingent on Smail and RMJ closing

the sale of the Hyundai dealership. ECF 55-2, PDF p. 2 (Recitals, ¶ D); ECF 55-3,

PDF pp. 14-15 (Addendum A, ¶ 3).

Because Hyundai had authorized only RMJ to operate the dealership, Smail

and RMJ notified Hyundai of the Asset Purchase Agreement for Hyundai’s approval

around July 26, 2019. ECF 55-4; ECF 55-53, PDF p. 33, ¶ 5. On August 6, 2019,

Hyundai emailed Smail an application package portal that Smail was to complete

and electronically submit to Hyundai for Hyundai’s review in deciding whether to

consent to Smail’s purchase of RMJ’s dealership. ECF 55-6; ECF 60-5, pp. 23:19-

25:13; ECF 60-4, pp. 11:1-12, 65:13-23. Only Smail, as the applicant, could access the

application portal; RMJ did not have access. ECF 60-4, pp. 65:24-66:11. Hyundai’s

August 6 email also highlighted various “additional info on required items within the

package,” which Hyundai highlighted to clarify to Smail what Hyundai required in

Smail’s application. ECF 55-6, PDF p. 2; ECF 60-5, pp. 23:19-25:13, 63:7-65:5.

Included in the information Hyundai highlighted as “required items within the

[application] package” was the following: “Financial Statements: Please provide

personal statements for all owners. Please also provide current and 2 years prior

2 Unless otherwise noted, “Smail” refers to Plaintiff Smail Imports, Inc.

Business Financial statements for any competitive franchises/dealerships or other

business owned (if applicable).” ECF 55-6, PDF p. 2.

After receiving access to the application portal, Smail began working on its

application, receiving assistance from RMJ when Smail requested it. ECF 55-7; ECF

55-8. Smail also reached out to Hyundai’s regional agent at various times to seek

clarification on certain aspects of the application, including what financial

statements to provide in light of Smail having been formed only two months earlier.

ECF 60-6, pp. 109:7-110:11. On August 28, 2019, Smail submitted its application to

Hyundai, though it did not provide a copy of its application to RMJ. ECF 55-52; ECF

55-9; ECF 60-6, p. 110:12-22. While Smail’s submission included hundreds of pages,

it did not include financial statements for Smail Auto Group’s other

franchises/dealerships. ECF 55-52. Instead, Smail’s application included a page

stating, “Smail Imports, Inc. d/b/a Smail Hyundai is was [sic] formed June 19, 2019

for the purpose of acquiring and holding Mike Camlin Hyundai. There is no financial

history for this entity. As such, there are no financial statements.” ECF 56-7, PDF p.

188.

Once Smail submitted its application to Hyundai on August 28, Smail and RMJ

tentatively planned for closing to occur on October 15, 2019. ECF 55-10; ECF 60-6,

p. 123:5-9. Several days before October 15, however, with Smail having not yet heard

back from Hyundai regarding Hyundai’s approval of the application, Smail and RMJ

agreed to push back the closing date to November 1 or November 4, 2019. ECF 55-

13; ECF 55-14; ECF 60-3, p. 67:8-21; ECF 60-6, p. 124:6-15.

About two weeks before the revised closing date, on October 21, 2019,

Hyundai informed Smail that its application was incomplete because it did not

include the financial statements for Smail Auto Group’s other franchises/dealerships,

which Hyundai’s original instructions required. ECF 55-18; ECF 60-4, p. 76:16-22;

ECF 55-6. Smail submitted this missing information a few days later, on October 23

and 24, 2019. ECF 55-20; ECF 55-21; ECF 55-22; ECF 55-23; ECF 55-24.

By November 4, 2019 (the new closing date), Smail had still not heard from

Hyundai on whether Hyundai approved Smail’s application. Thus, November 4, 2019

passed without Smail and RMJ closing the transaction, and RMJ notified Smail on

November 5, 2019 that it was terminating the APA. ECF 55-31. In terminating the

agreement, RMJ invoked Section 9.1(d) of the APA.3 Id. According to RMJ’s

interpretation, Section 9.1(d) provided RMJ the right to terminate if Hyundai had not

approved the transaction within 75 days of the APA’s execution. Given that 75 days

had passed and the parties had still not received approval from Hyundai, RMJ sent

its termination notice.4

In response, Smail contested RMJ’s termination, asserting that the

termination was improper and that Hyundai had already “statutorily” approved the

transaction. ECF 55-39. That is, Smail contended that under the Pennsylvania

Board of Vehicles Act, because Hyundai failed to respond to Smail’s application

within 60 days, Hyundai was deemed to have consented by operation of law. Thus,

3 Section 9.1(d) provides, “This Agreement may, by notice given prior to or at the

closing, be terminated: . . . By either [party], so long as such Party seeking to

terminate this Agreement has complied fully with its obligations under this

Agreement, if the condition in Section 5.5 (Manufacturer Application and Other

Actions) has not been obtained on or before seventy-five (75) days from and after the

date hereof[.]” ECF 55-2, PDF pp. 31-32.

4 Because LMJ’s and NR Realty’s Real Property Agreement was contingent on the

closing of the APA, RMJ’s termination of the APA also meant that LMJ and NR

Realty did not close on the Real Property Agreement.

according to Smail, the Act’s clock had run on Hyundai, so RMJ’s notice of

termination was late and ineffective. Id.

Given this dispute, Smail and LMJ brought suit in state court against RMJ

and NR Realty, and Defendants removed the case to federal court.5 ECF 1. Smail

and LMJ then filed an amended complaint, adding a claim against Hyundai, as well.

ECF 2. In the amended complaint, Smail brings two breach-of-contract claims

against RMJ: breach of the APA (Count I) and breach of the Real Property Agreement

(Count II). Id. at ¶¶ 61-73. Smail also brings a claim against Hyundai under the

Pennsylvania Board of Vehicles Act (Count III). Id. at ¶¶ 74-87.

Following fact discovery, the parties filed cross-motions for summary

judgment. Smail seeks summary judgment on all three counts. ECF 53. RMJ seeks

summary judgment on Counts I and II (ECF 58), and Hyundai seeks summary

judgment on Count III (ECF 61). The parties filed supporting and opposing briefs on

these motions, and the Court held oral argument. ECF 70. The matters are now

ready for disposition.

LEGAL STANDARD

Summary judgment is appropriate “if the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). At summary judgment, the Court must ask

“whether the evidence presents a sufficient disagreement to require submission to a

jury or whether it is so one-sided that one party must prevail as a matter of law.”

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986). In making this

determination, “all reasonable inferences from the record must be drawn in favor of

the nonmoving party and the court may not weigh the evidence or assess credibility.”

Goldenstein v. Repossessors, Inc., 815 F.3d 142, 146 (3d Cir. 2016) (cleaned up). The

5 Unless otherwise noted, any reference to “Smail” includes both Plaintiffs Smail and

LMJ; likewise, any reference to “RMJ” includes both Defendants RMJ and NR Realty.

moving party bears the initial burden to show the absence of a genuine dispute of

material fact, and “if the evidence is such that a reasonable jury could return a verdict

for the nonmoving party,” summary judgment is improper. Id. (citation omitted).

But if the non-moving party “fails to make a showing sufficient to establish the

existence of an element essential to that party’s case, and on which that party will

bear the burden of proof at trial,” summary judgment is warranted. Celotex Corp. v.

Catrett, 477 U.S. 317, 322 (1986). Summary judgment “is essentially ‘put up or shut

up’ time for the non-moving party: the non-moving party must rebut the motion with

facts in the record and cannot rest solely on assertions made in the pleadings, legal

memoranda, or oral argument.” Berckeley Inv. Grp., Ltd. v. Colkitt, 455 F.3d 195, 201

(3d Cir. 2006) (citation omitted).

“The rule is no different where there are cross-motions for summary

judgment.” Lawrence v. City of Phila., 527 F.3d 299, 310 (3d Cir. 2008). The parties’

filing of cross-motions “does not constitute an agreement that if one is rejected the

other is necessarily justified[.]” Id. But the Court may “resolve cross-motions for

summary judgment concurrently.” Hawkins v. Switchback MX, LLC, 339 F. Supp.

3d 543, 547 (W.D. Pa. 2018) (Conner, J.) (citations omitted). When doing so, the Court

views the evidence “in the light most favorable to the non-moving party with respect

to each motion.” Id. (citations omitted).

DISCUSSION & ANALYSIS

The Court turns first to Smail’s and Hyundai’s cross-motions for summary

judgment regarding Count III, given that the analysis and resolution of that Count

affects the Court’s analysis with respect to the remaining counts. The Court will then

address Smail’s and RMJ’s cross-motions for summary judgment regarding Counts I

and II.

I. The Court will grant Hyundai’s motion for summary judgment, and deny

Smail’s motion for summary judgment, as to Smail’s Pennsylvania Board

of Vehicles Act claim (Count III).

Smail and Hyundai each move for summary judgment on Count III, in which

Smail alleges that Hyundai violated Section 818.310(b)(5) of the Pennsylvania Board

of Vehicles Act. ECF 2, ¶¶ 74-87. Because the undisputed facts show that Hyundai

did not violate the Act, the Court will grant Hyundai’s motion for summary judgment

and deny Smail’s motion.

Section 818.310(b)(5) of the Pennsylvania Board of Vehicles Act states that:

It shall be a violation of this chapter for any manufacturer . . . to: Fail

to respond in writing to a request for consent as specified in paragraphs

(3) and (4) within 60 days of receipt of a written request on the forms, if

any, generally utilized by the manufacturer or distributor for such

purposes and containing the information required. The failure to

respond within the time period set forth in this paragraph shall be

deemed to be approval of the request, and the manufacturer or

distributor shall execute and deliver a franchise to the applicant within

30 days of the expiration of this time period. A manufacturer or

distributor shall acknowledge in writing to the applicant the receipt of

the forms, and, if the manufacturer or distributor requires additional

information to complete its review, the manufacturer or distributor shall

notify the applicant within 15 days of the receipt of the forms. If the

manufacturer or distributor fails to request additional information from

the applicant within 15 days after receipt of the initial forms, the 60-day

time period for approval shall be deemed to run from the initial receipt

date. Otherwise, the 60-day time period for approval shall run from

receipt of the supplemental requested information. In no event shall the

total time period for approval exceed 75 days from the date of the receipt

of the initial forms.

63 P.S. § 818.310(b)(5).

Smail argues that Hyundai did not request “additional information” within 15

days of receiving Smail’s application, nor responded in writing with its approval or

disapproval of Smail’s application within 60 days of receiving the application. E.g.,

ECF 54, pp. 27-29. Thus, in Smail’s view, Section 818.310(b)(5) dictates that

Hyundai’s “failure to respond within the time period set forth in this [provision] shall

be deemed to be approval of [Smail’s application].” 63 P.S. § 818.310(b)(5). Smail

argues that Hyundai therefore violated this provision because Hyundai did not

“execute and deliver a franchise to [Smail] within 30 days of [Hyundai’s statutorily-

deemed approval].” Id.

As discussed below, however, Smail’s claim rests on the premise that

Hyundai’s deadlines under Section 818.310(b)(5) were triggered on August 28, 2019,

when Smail initially submitted its application to Hyundai. But this premise is

incorrect, because Smail’s initial submission did not include all of the information

required by Hyundai from the outset. Rather, the deadlines imposed on Hyundai—

15 days to request “additional information” and 60 days to “respond in writing”—were

not triggered and did not begin to run until October 24, 2019, when Smail submitted

all of the initially required information. Thus, because Hyundai’s deadlines under

Section 818.310(b)(5) did not begin to run until October 24, 2019, and because RMJ

terminated the APA on November 5, 2019—before any of Hyundai’s statutory

deadlines expired—Hyundai did not violate Section 818.310(b)(5).

The facts material to this issue are not in dispute. On August 6, 2019, Hyundai

provided Smail access to the application portal, along with a list of information that

Hyundai required from Smail. ECF 55-6. Hyundai’s list of “required items” included

various documents and information about Smail’s owners and related

dealerships/franchises. Id. at PDF p. 2. For example, Hyundai required “all owners

[to] . . . fill out an application,” and required customer satisfaction history “for any

other dealerships or franchises you are involved in, if applicable.” Id. Also required,

and most relevant here, were the “financial statements . . . for all owners,” as well as

the “Business Financial statements for any competitive franchises/dealerships or

other business owned (if applicable),” though Hyundai did not provide a specific form

for these statements. Id.; ECF 55-40, p. 87:4-20.

Three weeks later, on August 28, 2019, Smail submitted its application to

Hyundai. ECF 55-52. Missing from this submission, however, were the “Business

Financial statements” of any of the other franchises/dealerships within Smail Auto

Group’s corporate umbrella. See generally id.; see also ECF 55-44, p. 105:2-16.

Instead, Smail’s application included only a single page on this topic stating, “Smail

Imports, Inc. d/b/a Smail Hyundai is was [sic] formed June 19, 2019 for the purpose

of acquiring and holding Mike Camlin Hyundai. There is no financial history for this

entity. As such, there are no financial statements.” ECF 56-7, PDF p. 188.

In providing only this single page of financial information, Smail relied on a

phone call it had with Hyundai’s regional agent. Specifically, Smail’s agent asked

Hyundai’s agent what document to provide regarding Smail’s financial statements,

given that Smail lacked any financial history; Hyundai’s agent instructed Smail to

include the provided statement quoted above. ECF 60-6, p. 109:7-23. Notably,

however, Smail’s agent only asked about Smail’s financial statements, and never

asked about the financial statements for Smail Auto Group’s other

dealerships/franchises. Id. at pp. 109:24-110:11. Hyundai thus never instructed

Smail to provide financial statements for Smail only, and not to provide the financial

statements for the related dealerships/franchises—Smail simply did not ask about

the financial statements for the related dealerships/franchises. Rather, as stated in

its August 6, 2019, email, Hyundai required the related dealership financial

statements. ECF 55-6.

After Hyundai’s national office reviewed Smail’s initial application, Hyundai

notified Smail to provide the missing financial statements. ECF 55-18. Smail did so

on October 23-24, 2019, about two months after it initially submitted its application.

ECF 55-20; ECF 55-21; ECF 55-22; ECF 55-23; ECF 55-24. Smail therefore did not

submit all of the information initially required by Hyundai, and thus complete its

application, until October 24, 2019.

As such, Hyundai’s deadlines under Section 818.310(b)(5) were not triggered

until October 24, 2019, when Smail submitted the missing financial statements that

Hyundai required from the outset. This is because the statute’s clock only begins to

run once Hyundai received Smail’s “written request on the forms, if any, generally

utilized . . . for such purposes and containing the information required.” See 63 P.S.

§ 818.310(b)(5) (emphasis added). That is, according to the most natural reading of

this provision, Smail’s “written request”—i.e., its application—must at least “contain[

all of] the information required” to trigger the statute’s deadlines. See id. (stating

that it’s a violation of the provision only once a manufacturer “Fail[s] to respond . . .

within 60 days of receipt of a written request on the forms . . . and containing the

information required”). The deadlines imposed on Hyundai by Section 818.310(b)(5)

had therefore not expired when RMJ terminated the APA less than two weeks later.

Smail makes three main arguments to support its contention that the clock

ran from the submission of its initial application, notwithstanding the missing

financial statements. None of these arguments are ultimately persuasive.

First, Smail takes an overly narrow view of the term “forms” under the statute.

That is, Smail argues that it completed the “forms” provided, and that the financial

statements are separate documents or attachments. Therefore, Smail asserts that

these separate financial statements were not part of the “forms” that it needed to

submit to trigger the statute’s clock. But this is too restrictive a reading of the statute.

To begin with, the application portal and accompanying email instructions

provided by Hyundai to Smail expressly required the submission of certain materials,

including all competitive business financial statements, as part of the application.

This package of required material, as a whole, comprised the “forms,” and the

“information required” by those forms, under the statute. In other words, the

application portal comprised the “forms,” while the accompanying email instructions

requiring the financial statements comprised the “information required” by the

forms.

But even if that weren’t so, the statute is broader than simply having an

applicant fill out standard forms initially to trigger the clock. That is, the statute

permits the manufacturer to require information, from the outset, that an applicant

may not be able to submit within the four corners of a form. See 63 P.S. §

818.310(b)(5) (stating it is a violation for a manufacturer to “Fail to respond in writing

to a request for consent . . . within 60 days of receipt of a written request on the forms,

if any, generally utilized by the manufacturer . . .” (emphasis added)).

Instructive in this regard is Brooks Auto. Grp., Inc. v. GM LLC, No. 18-798,

2020 WL 2309247 (W.D. Pa. May 8, 2020) (Horan, J.). In Brooks, the parties disputed

whether the manufacturer violated Section 818.310(b)(5) by not timely responding to

the franchise applicant’s submission. As in this case, at issue was when the clock

began to run under the statute. Id. at *3-4. In ruling in the manufacturer’s favor,

the court found: “An informed decision process cannot begin until the required initial

information has been provided [to the manufacturer]. The statute allows for

manufacturers to prescribe the initial required information, and once such

information is submitted, the statutory time limit for the manufacturer to perform

its investigation and to convey its decision, 60 or 75 days, begins to run.” Id. at *4.

As relevant here, the court in Brooks found that Section 818.310(b)(5)’s

deadlines did not turn on whether the information required could be submitted on a

“form” or not—the manufacturer could require whatever information it needed, and

the statutory clock would trigger only when all of the required materials were

provided. See, e.g., id. at *4 (describing the “required initial forms and information”

and the “forms and documentation” the manufacturer required initially); see also 63

P.S. § 818.310(b)(5) (triggering the manufacturer’s deadline after its “receipt of a

written request on the forms, if any, generally utilized by the manufacturer . . . and

containing the information required” (emphasis added)). In other words, the court in

Brooks concluded that the deadlines under Section 818.310(b)(5) were not triggered

until the manufacturer received everything it requested initially, regardless of

whether the information could be submitted on a “form.” See Brooks, 2020 WL

2309247, at *4-5. This Court agrees.

Second, Smail makes a similar, but slightly different, argument that Section

818.310(b)(5) only requires the initially submitted information to be captured on a

form, and then gives the manufacturer the option to ask for additional, “non-form”

information within 15 days. Smail suggests that such “non-form” information would

include separately provided materials such as the financial statements at issue here.

But this argument falls short. Certainly, under the statute, a manufacturer can ask

for additional information within 15 days of receiving the applicant’s submission,

should it need additional information not yet requested. But that provision does not

mean that the manufacturer is unable to require that information in the first

instance, thereby requiring the applicant to submit such information before the

statute’s deadlines are triggered.

Indeed, Section 818.310, while providing certain protections to Smail, does not

absolve Smail of its responsibility to fully complete Hyundai’s initial requirements,

nor shifts the onus to Hyundai to discover and remedy Smail’s insufficient

application—the Act is not so one-sided against Hyundai. See Rohrich Cadillac, Inc.

v. Bureau of Prof’l & Occupational Affairs, 73 A.3d 652, 657 (Pa. Commw. Ct. 2013)

(“The legislature . . . has instructed that the Board of Vehicles Act is intended to

promote fair dealing and honesty in the vehicle industry and among those engaged

therein without unfair or unreasonable discrimination or undue preference or

advantage.” (cleaned up)).

Third, Smail argues that Hyundai’s August 6, 2019, email requiring the

financial statements could only reasonably be read to encompass the financial

statements of Smail itself, rather than of the entire Smail Auto Group’s corporate

family. E.g., ECF 63, pp. 11-12. The Court disagrees. Hyundai’s emailed instructions

required the “personal [financial] statements for all owners,” and then, in the same

section, immediately instructed to “also provide . . . Business Financial statements

for any competitive franchises/dealerships or other business owned (if applicable).”

ECF 55-6, PDF p. 2. As the apparent focus of this requirement is on Smail’s “owners”

(e.g., requiring the “personal statements for all owners”), the Court finds that this

requirement is properly read as requiring financial information for all “competitive

franchises/dealerships or other business owned” by Smail’s owners, not just any such

entities owned by Smail itself. Certainly, considering the nature of the transaction

and Smail’s non-existent financial history, such a requirement was neither

unreasonable nor unexpected.

Returning, then, to the crux of the issue at hand, the Court finds that Section

818.310(b)(5)’s clock did not start to run until Smail had provided all of the

information Hyundai required from the outset, including the financial statements for

Smail’s affiliated entities. That did not occur until October 24, 2019, which means

that Hyundai’s statutory deadlines had not expired when RMJ terminated its

agreement with Smail less than two weeks later. Hyundai therefore cannot be

deemed to have consented to the sale by operation of law.

To be sure, this may seem like a harsh result for Smail. Smail simply neglected

to provide financial statements of its sister companies; and there is some evidence

that Hyundai’s regional manager “dropped the ball” by not discerning the missing

information sooner. Smail was also quick to provide the information when Hyundai

eventually got around to asking for it. But Smail relies here on “statutory approval”

to impute to Hyundai implicit consent to an agreement that it did not consent to

explicitly. This is, in a certain sense then, a highly technical claim, demanding strict

adherence to the terms of the statute. Smail cannot wield the strict requirements of

the statute against Hyundai when it has not complied with those requirements itself.6

All told, because Smail did not submit the required financial statements until

October 24, 2019, the statute’s deadlines were not triggered until that point. As RMJ

terminated the APA before Hyundai’s deadlines expired, Smail’s Count III fails as a

matter of law. Summary judgment will be granted to Hyundai on Count III.

II. The Court will grant RMJ’s motion for summary judgment, and deny

Smail’s motion for summary judgment, as to Smail’s claim for breach of

the Asset Purchase Agreement (Count I).

Turning next to Smail’s claims against RMJ, Smail alleges in Count I that RMJ

breached the Asset Purchase Agreement and improperly terminated the agreement.

ECF 2, ¶¶ 61-67. Smail and RMJ each move for summary judgment on Count I. For

the following reasons, the Court concludes that RMJ validly and effectively

terminated the APA. The Court will therefore grant summary judgment to RMJ as

to Count I, and deny Smail’s motion for summary judgment.

A. RMJ’s termination of the APA under Section 9.1(d) of the

agreement was valid and effective.

Smail and RMJ first dispute whether RMJ could validly and effectively

terminate the APA under Section 9.1(d) of the agreement, which was RMJ’s basis for

termination. ECF 55-31. While they dispute the proper interpretation of Section

9.1(d), the Court need not resolve the parties’ competing interpretations, because

even under Smail’s proposed interpretation of Section 9.1(d), Smail cannot prevail.

6 Moreover, this is not a situation where an applicant omitted immaterial or

insignificant information. Rather, Smail did not include any financial statements for

any of the other dealerships its owners owned. This would appear to be critical

information, especially because the new Smail entity had no financial history itself.

Construing Section 9.1(d) of the APA in Smail’s favor, RMJ properly terminated the

agreement.

Section 9.1(d) of the APA gives either party the right to terminate the APA, “by

notice given prior to or at the Closing . . . so long as such Party seeking to terminate

this Agreement has complied fully with its obligations under this Agreement, if the

condition in Section 5.5 (Manufacturer Application and Other Actions) has not been

obtained on or before seventy-five (75) days from and after the date hereof[.]” ECF 55-

2, PDF pp. 31-32 (emphasis added). Section 5.5, in turn, refers to Smail submitting

its application to Hyundai. Id. at PDF pp. 20-21. Thus, Smail argues that on its face,

Section 9.1(d) only permits termination of the APA if Smail failed to submit its

application to Hyundai within 75 days of the APA’s execution.

The APA is dated July 24, 2019, meaning Smail, per its own interpretation,

had to finish submitting its application to Hyundai by October 8, 2019, to comply with

Section 5.5 within 75 days. See ECF 55-2, PDF p. 1. But as discussed above, Smail

did not complete its application submission to Hyundai until October 24, 2019, when

it provided the missing financial documents that Hyundai had required from the

outset. Smail thus did not satisfy “the condition in Section 5.5” within 75 days of the

APA’s execution. As such, RMJ could terminate the APA pursuant to Section 9.1(d)

by giving notice “prior to or at the Closing.” There is no dispute that it did so.7 See

ECF 55-31.

B. RMJ did not breach the APA.

Next, the parties dispute whether RMJ breached the APA by failing to take all

commercially reasonable and necessary steps to close the transaction before

7 Smail also cannot prevail under RMJ’s proposed interpretation of the APA. RMJ

argues that Section 9.1(d) allowed it to terminate the APA if Hyundai did not approve

Smail’s application within 75 days. As Hyundai did not provide such approval within

the requisite 75 days, RMJ’s termination was proper under this interpretation also.

It is undisputed that Hyundai never affirmatively approved the application. And as

terminating the agreement. E.g., ECF 54, pp. 22-25; ECF 59, pp. 31-34. Smail makes

two primary arguments that RMJ breached its obligations: first, that RMJ

improperly terminated the APA; and second, that RMJ did not reach out to Smail and

Hyundai to try to complete the transaction before terminating the APA. E.g., ECF

54, pp. 22-24; ECF 64, pp. 12-14. Neither argument prevails.

Smail’s first argument—that RMJ improperly terminated the APA—is

unavailing for the reasons just discussed. Section 9.1(d) of the APA provided RMJ a

valid basis to terminate the agreement. So RMJ’s termination of the APA itself

cannot be a breach of its obligations.

Smail’s second argument also falls short. Smail does not dispute that RMJ

satisfied its obligations before the original closing date, October 15, 2019. E.g., ECF

54, p. 18 (“Without a doubt, RMJ and Smail reasonably cooperated in the preparation

and filing of [Smail’s] Application.”); see also ECF 55-7; ECF 55-8. Rather, Smail

asserts that RMJ “fail[ed] to take all appropriate actions with regard to the status of

the Application after October 15, 2019, when the parties agreed to re-schedule the

closing date[.]” ECF 54, pp. 23-24 (emphasis added); ECF 64, pp. 12-14. Smail argues

that RMJ thus breached the APA, which required the parties to “‘take such further

actions as may be necessary or appropriate to effectuate . . . the transactions,’ [to] use

‘commercially reasonable efforts to comply . . . with all [of their] respective covenants

and agreements under this Agreement,’ and [to] use ‘commercially reasonable efforts

to cause the conditions in Article 6 and Article 7, respectively, to be satisfied.’” ECF

54, p. 23 (quoting §§ 5.2, 5.3, & 5.16 of the APA).

This argument, however, is foreclosed by Third Circuit precedent. In National

Data Payment Systems, Inc. v. Meridian Bank, the Third Circuit concluded that a

discussed above, contrary to Smail’s arguments, Hyundai cannot be deemed to have

provided statutory consent under Section 818.310(b)(5) of the Board of Vehicles Act,

as the statute’s deadlines had not expired upon RMJ’s termination of the APA.

party’s vested, contractual right to terminate an agreement supersedes any good faith

or best efforts obligations contained in the contract. See Nat’l Data Payment Sys.,

Inc. v. Meridian Bank, 212 F.3d 849, 855 (3d Cir. 2000) (Alito, J.) (“Although NDPS

claimed that it would have a definite answer by the next day at the latest, it did not

make its final decision to close until November 3, well after the termination date. By

this time, Meridian’s good faith obligation had been superseded by the Agreement’s

express termination option, and it was free to call off the deal at its discretion.”).

In National Data, the relevant agreement stated that the “agreement may be

terminated” if closing had not occurred by October 30. Id. at 852. On October 30,

National Data told Meridian (the other party to the agreement) that it would decide

whether to close the deal “later that day or the next day”; Meridian did not mention

that that day was the final day before the termination provision was triggered. Id.

at 853. But not until November 3 did National Data inform Meridian that it was

“prepared to close immediately.” Id. On November 6, Meridian terminated the

agreement. Id. The Third Circuit found the termination valid and Meridian not in

breach of its “best efforts” obligations under the agreement, reasoning that because

Meridian’s termination rights arose on October 30, Meridian was not subject to the

best efforts obligations after that date—Meridian’s “good faith obligation had been

superseded by the Agreement’s express termination option, and it was free to call off

the deal at its discretion.” Id. at 855.

The same goes here. RMJ’s termination rights arose on October 8, 2019, when

Smail missed the 75-day deadline to fully submit its application to Hyundai (per

Smail’s interpretation of Section 9.1(d)), as discussed above. Thus, as the Third

Circuit reasoned in National Data, RMJ’s termination rights superseded RMJ’s

“commercially reasonable” and best efforts obligations after that date. As Smail only

contends that RMJ violated these obligations after October 15, 2019 (i.e., after RMJ’s

termination right vested), Smail’s arguments fail as a matter of law.8

But even assuming RMJ had a duty to continue to use best efforts all along,

Smail has not provided any legal or factual support for its contention that RMJ failed

to do so. Under the APA, RMJ was required to use “commercially reasonable efforts.”9

Smail argues that this required RMJ to follow up with Hyundai to get Hyundai’s

approval for Smail, and to provide some advance notice to Smail to try to work out

RMJ’s concerns before terminating the agreement. Considering the nature of the

transaction, however, these actions would not be “commercially reasonable.”

While “commercial reasonableness” doesn’t have a fixed definition, its focus is

on what is reasonable in light of the transaction, the totality of the circumstances,

and the economic interests of the parties. See Paramount Fin. Commc’ns, Inc. v.

8 Smail attempts to distinguish National Data in two main respects. ECF 64, pp. 12-

14. Smail first attempts to distinguish the termination provision in National Data,

which provided that the “Agreement may be terminated by either [party] and shall

be of no further force and effect” if closing did not occur by October 30. Nat’l Data,

212 F.3d at 852. Smail argues that the agreement automatically had “no further

force and effect” if closing did not occur by October 30, and thus attempts to

distinguish it from the APA here. ECF 64, pp. 12-13. But the Court does not find

this language to matter, as the Third Circuit’s decision was not based on this “no

further force and effect” language. Second, Smail, in seeking to distinguish National

Data, focuses on the scope of RMJ’s obligations under the APA, arguing that the APA

imposes certain obligations on RMJ until the “closing date,” which is not a set date in

the APA. ECF 64, pp. 13-14. But this too misses the mark. The Third Circuit’s

reasoning and conclusion in National Data focused on when the termination right

arose, not when the best efforts obligations ended. That is, once the termination right

arose, it superseded the best efforts obligations, regardless of how long the agreement

would have otherwise imposed such obligations in the absence of the termination right

vesting.

9 Specifically, Section 5.5 required the parties to “reasonably cooperate” in the

preparation and filing of Smail’s application to Hyundai; to take all “appropriate

action” regarding the same; and to use all “commercially reasonable efforts” for things

that are necessary, appropriate, or advisable under law in order to consummate the

transaction. ECF 55-2, PDF p. 21.

Broadridge Inv. Commc’n Sols., Inc., No. 15-405, 2019 WL 3022346, at *7 (E.D. Pa.

May 23, 2019) (“Under this precedent, the Court concludes that ‘commercially

reasonable efforts’ requires a totality of the circumstances assessment, in which

economic interests and diligence, among other factors, may be considered.”). Here,

even when viewing the evidence in the light most favorable to Smail, there are three

main considerations which convince the Court that imposing the obligations Smail

seeks to impose on RMJ would be unreasonable as a matter of law.

First, the parties’ economic interests and incentives suggest that it was not

commercially reasonable to impose any obligations on RMJ to “follow up” with

Hyundai. To obtain Hyundai’s approval, Smail was required to provide certain

information to Hyundai. This was information entirely within Smail’s control, and

concerned Smail alone. In fact, RMJ was not included on the correspondence between

Smail and Hyundai, which is common as the selling party (i.e., RMJ) is generally “not

involved in the process, . . . [as] the process is primarily between Hyundai and the

buying party [i.e., Smail].” ECF 60-5, pp. 59:7-14, 75:1-9; ECF 60-4, p. 59:11-19. In

this context, it was commercially reasonable for Smail, not RMJ, to be the one to

follow up with Hyundai. Put differently, the information and transaction costs

associated with RMJ serving as a point of contact with Hyundai on this issue were

much higher here, and it would be both unusual and unreasonable to require RMJ to

carry the burden of following up and ensuring that Hyundai acted in timely fashion.

Instead, the party with much lower transaction costs (here, indisputably Smail)

should carry that burden as a matter of commercial reasonableness. Smail points to

nothing to the contrary.

Second, from RMJ’s perspective, it was in a more precarious economic position.

It was engaged in a potential sale with Smail, which very well could have fallen

through (as it ultimately did). That risk would be of greater concern to RMJ as

evidenced, for example, by the lengths it appears to have gone to keep the potential

sale relatively quiet for fear of losing employees. See ECF 60-1, pp. 27:8-29:7, 32:10-

18. In Section 5.5 of the APA itself, the parties acknowledged some of these concerns,

when they made clear that the efforts RMJ was required to engage in to close the deal

did not extend to the point of causing disruption to its daily operations or incurring

material expense or obligation. Under these circumstances, it would have been

commercially unreasonable to impose on RMJ affirmative obligations to ensure

Hyundai’s timely approval.10 Again, Smail points to nothing to the contrary in

arguing otherwise.

Third, there is no basis in the APA to impose on RMJ a duty for it to provide

Smail with additional and advance notice before seeking to terminate the APA. If

Smail desired those protections, it could have contracted for them ex ante. Yet it did

not. Thus, to conclude that RMJ was required to take such actions—i.e., to provide

advance notice and time to attempt a resolution—before exercising its otherwise-

vested termination rights would be to improperly add conditions to Section 9.1(d)’s

termination provisions that are not included in, nor consistent with, the APA’s text.

See, e.g., E.R. Linde Const. Corp. v. Goodwin, 68 A.3d 346, 349 (Pa. Super. Ct. 2013)

(“Generally, courts will not imply a contract that differs from the one to which the

parties explicitly consented. We are not to assume that the language of the contract

was chosen carelessly or in ignorance of its meaning. Where the language of the

contract is clear and unambiguous, a court is required to give effect to that language.”

(citations omitted)); ECF 55-2, PDF pp. 31-32 (stating that a party may terminate the

APA pursuant to Section 9.1(d) by simply giving “notice . . . prior to or at the Closing”);

cf. Nat’l Data, 212 F.3d at 855 (“Meridian had no duty under the Agreement’s best-

efforts provision to remind NDPS of the approaching termination date. The October

10 The facts here reflect that RMJ nonetheless made inquiries of Hyundai regarding

Smail’s application. E.g., ECF 60-4, pp. 28:2-29:11, 71:2-72:24.

30 termination provision was the subject of substantial negotiations during the

Agreement’s drafting, and it was explicitly spelled out on the face of the Agreement.”).

For these reasons, including that RMJ’s vested termination right superseded

any subsequent obligations to take all commercially reasonable efforts under Third

Circuit precedent, RMJ did not breach any requisite obligations before it terminated

the APA.11

C. RMJ did not waive the APA’s time-is-of-the-essence provision and

did not have a common-law obligation to provide reasonable notice

to Smail before terminating the APA.

The Court turns last to Smail’s and RMJ’s dispute as to whether RMJ waived

the APA’s time-is-of-the-essence provision. If it did, RMJ would have a common-law

obligation to provide Smail with reasonable notice prior to terminating the APA. The

Court concludes that RMJ did not waive this provision, so RMJ’s termination of the

APA did not run afoul of any common law notice requirements.

Section 10.5 of the APA states, “With regard to all dates and time periods set

forth or referred to in this Agreement, time is of the essence.” ECF 55-2, PDF p. 34.

Smail argues, however, that RMJ waived this time-is-of-the-essence provision

through its conduct.12 E.g., ECF 54, p. 21; ECF 64, pp. 15-17. That is, according to

11 The Court also rejects Smail’s arguments that RMJ breached the implied duty of

good faith and fair dealing. ECF 54, pp. 24-25; ECF 2, ¶¶ 65, 71. Smail largely relies

on the same grounds it raises regarding RMJ’s purported breach of the APA. ECF

54, pp. 24-25. For the same reasons, the Court finds Smail’s arguments unavailing,

as RMJ properly terminated the APA under Section 9.1(d), and did not fail to take

any required efforts.

12 Smail doesn’t phrase its argument quite like this, instead arguing that a party

must provide reasonable notice if it acts like time is not of the essence. Yet the case

law Smail cites centers on the waiver of a time-is-of-the-essence provision. Further,

the APA itself does not set a closing date, so the only possible waiver relevant here is

a waiver of the time-is-of-the-essence provision (i.e., RMJ could not waive the closing

date, because no such date was set in the APA). Smail cannot disconnect its argument

that RMJ was subject to a common law requirement to provide reasonable notice prior

to termination, from the purported waiver of the time-is-of-the-essence provision.

Smail, RMJ “acted as if time was not an essential aspect of the contract.” ECF 54, p.

21. In particular, Smail points to RMJ agreeing to move the closing date from October

15, 2019 to November 4, 2019, as well as RMJ’s cooperation with Smail during this

time instead of immediately terminating the APA. Id.; see also id. at pp. 19-20

(relying on cases addressing waiver of deadlines and time-is-of-the-essence

provisions). Smail argues that RMJ’s cooperation operated as an implied waiver of

the time-is-of-the-essence provision, and that, as a result, RMJ must comply with

Pennsylvania common law, which requires parties to give reasonable notice before

terminating a contract. See, e.g., Davis v. Northridge Develop. Associates, 622 A.2d

381, 385 (Pa. Super. Ct. 1993) (“[E]ven though the time fixed in an agreement for

settlement is stated to be of the essence of the agreement, it may be extended by oral

agreement or be waived by the conduct of the parties, and where the parties treat the

agreement as in force after the expiration of the time specified for settlement it

becomes indefinite as to time and neither can terminate it without reasonable notice

to the other.” (citation omitted)).

The Court finds, however, that RMJ did not waive the time-is-of-the-essence

provision.

The APA requires any waivers to be in writing. Section 10.7, which the parties

focus much of their attention on, provides that “[n]either the failure nor any delay by

any party in exercising any right, power, or privilege under this Agreement . . . will

operate as a waiver of such right, power, or privilege[.]” ECF 55-2, PDF p. 34.

Additionally, and more significantly, Section 10.4 provides that “[a]ll notices,

consents, waivers, and other communications under this Agreement must be in

writing[.]” Id. at PDF p. 33 (emphasis added). Thus, even if the time-is-of-the-essence

provision does not comprise a “right, power, or privilege” addressed in Section 10.7,

as Smail argues, Section 10.4 still requires such waiver to have been in writing.

It is undisputed that RMJ did not provide any written waiver of the time-is-of-

the-essence provision, thus imposing a high burden for Smail to prevail. See Nat’l

Data, 212 F.3d at 855 (rejecting National Data’s argument that “Meridian’s course of

conduct constituted an implied waiver” because “the Agreement’s no-oral-waiver

clause clearly and unequivocally indicates the intention of the parties that there be

no modifications or waivers of the contract provisions except in a writing signed by

both parties. The parties even provided that delay in exercising rights under the

contract would not constitute a waiver of those rights” (cleaned up)). Instead, Smail

argues that RMJ implicitly waived the provision through its conduct.

It is true, as Smail argues, that a party may waive a time-is-of-the-essence

provision through its conduct. But because Section 10.4 requires all waivers to be in

writing, the evidence must first show that the parties clearly and unequivocally

modified the requirement that waivers be in writing. That is, “[w]hile it is true that

a written contract prohibiting a non-written modification may nevertheless be

modified by a subsequent oral agreement, there must first be an intent to waive the

contract requirement that amendments be in writing.” Douglas v. Benson, 439 A.2d

779, 783 (Pa. Super. Ct. 1982); see also Somerset Cmty. Hosp. v. Allan B. Mitchell &

Associates, 685 A.2d 141, 146 (Pa. Super. Ct. 1996) (“An agreement that prohibits

non-written modification may be modified by subsequent oral agreement if the

parties’ conduct clearly shows the intent to waive the requirement that the

amendments be made in writing.”). Thus, a party may modify a written-waiver

requirement “without a writing if and when his conduct clearly shows an intent to

waive the provision prohibiting non-written modification.” Douglas, 439 A.2d at 783.

The burden for such a showing is a significant one. An implied modification of

a written-waiver requirement “must be proved by clear, precise and convincing

evidence.” Somerset Cmty. Hosp., 685 A.2d at 146. The party’s conduct must “clearly

show[] the intent to waive the requirement that the amendments be made in writing.”

Id. In other words, the implied waiver “must be of such specificity and directness as

to leave no doubt of the intention of the parties to change what they had previously

solemnized by a formal document,” and the evidence establishing the waiver “must

be of such a persuasive character that it moves like an ink eradicator across the

written paper, leaving it blank so that the parties in effect start afresh in their

negotiations and mutual commitments.” MDNet, Inc. v. Pharmacia Corp., 147 F.

App’x 239, 244 (3d Cir. 2005) (quoting Gloeckner v. Sch. Dist. of Baldwin Tp., 175

A.2d 73, 75 (Pa. 1961)).

Here, the evidence does not so clearly show that RMJ agreed to amend the

APA’s requirement that all waivers be in writing, and thus RMJ could not have

waived the time-is-of-the-essence provision by its conduct only. While Smail argues

that RMJ waived the time-is-of-the-essence provision through its conduct, Smail fails

to show by “clear, precise and convincing evidence” that RMJ first waived the written-

waiver requirement. Indeed, the Court is unaware of, and the parties fail to show,

any such evidence.

Nor is the Court persuaded that RMJ’s conduct demonstrates that it waived

the time-is-of-the-essence provision, or otherwise acted like time was not essential,

regardless of the written-waiver requirement. After determining that the original

closing date (October 15, 2019) had to be postponed, RMJ agreed to a single, two-

week postponement to the closing date. See ECF 55-13; ECF 55-14. The evidence

shows, as Smail highlights, that RMJ made efforts to close the transaction even up

to the day it terminated the APA. E.g., ECF 55-30; ECF 55-49, p. 8; ECF 55-45, pp.

106:17-107:1. Yet RMJ promptly terminated the APA on November 5, 2019, the day

after the parties’ revised closing date—which had passed without the parties closing.

Based on these undisputed facts, the Court concludes that RMJ did not waive the

time-is-of-the-essence provision or act like time was not essential. Rather, RMJ

agreed to a single, short, finite extension of the closing date, and terminated the APA

as soon as the revised closing date had passed without a closing.

The Court therefore finds unavailing Smail’s argument that RMJ’s

termination was defective under Pennsylvania common law due to RMJ not providing

reasonable notice before termination.

Accordingly, for all of the reasons discussed above, the Court will grant

summary judgment to RMJ on Count I.

III. The Court will grant RMJ’s motion for summary judgment, and deny

Smail’s motion for summary judgment, as to Smail’s claim for breach of

the Real Property Agreement (Count II).

The Court will also grant summary judgment to RMJ on Count II. In Count

II, Smail alleges that RMJ breached the Real Property Agreement that Smail and

RMJ executed. ECF 2, ¶¶ 68-73. However, the Real Property Agreement was made

contingent upon the simultaneous closing of the APA. ECF 55-2, PDF p. 2 (Recitals,

¶ D); ECF 55-3, PDF pp. 14-15 (Addendum A, ¶ 3). Because RMJ properly terminated

the APA and the parties never closed, Smail’s claim based on a purported breach of

the Real Property Agreement fails. Summary judgment will therefore be granted to

RMJ on Count II.

CONCLUSION

For the reasons discussed above, the Court will grant RMJ’s motion for

summary judgment (Counts I and II), grant Hyundai’s motion for summary judgment

(Count III), and deny Smail’s motion for summary judgment. Final judgment will be

entered in favor of Defendants. An appropriate order follows.

DATE: July 27, 2021 BY THE COURT:

/s/ J. Nicholas Ranjan

United States District Judge