       In the United States Court of Federal Claims
                    Nos. 10-647C, 11-100C, and 12-900C
                           (Filed: June 14, 2017)
                            CONSOLIDATED
                        NOT FOR PUBLICATION

                                  )
COLONIAL CHEVROLET CO.,           )
INC., et al.,                     )
                                  )
               Plaintiffs,        )
v.                                )
                                  )
THE UNITED STATES,                )
                                  )
               Defendant.         )
                                  )
********************* )
ALLEY’S OF KINGSPORT, INC., et )
al.,                              )
                                  )      RCFC 56(d)
               Plaintiffs,        )
v.                                )
                                  )
THE UNITED STATES,                )
                                  )
               Defendant.         )
                                  )
****** *************** )
SPITZER MOTOR CITY, INC., et al., )
                                  )
               Plaintiffs,        )
v.                                )
                                  )
THE UNITED STATES,                )
                                  )
               Defendant.         )
                                  )

         ORDER GRANTING-IN-PART AND DENYING-IN-PART
               GM PLAINTIFFS’ RULE 56(d) MOTION
        Pending before the court is a renewed motion for discovery pursuant to Rule 56(d)

of the Rules of the United States Court of Federal Claims (“RCFC”) filed by plaintiffs in

Colonial Chevrolet Co., Inc., et al. v. United States (Case No. 10-647C). The plaintiffs

are former General Motors Corporation (“GM”) franchisees (“GM plaintiffs”) who claim

that the United States government’s actions in connection with the GM bailout, which

resulted in the United States becoming a majority shareholder in the post-bankruptcy

GM, amounted to a taking of their franchise agreements without just compensation under

the Fifth Amendment. As discussed in A & D Auto Sales, Inc. v. United States, 748 F.3d

1142, 1147, 1150 (Fed. Cir. 2014), the plaintiffs contend that the taking arose when the

United States required GM to terminate the plaintiffs’ car dealership franchise

agreements as a condition to the government providing financial assistance to GM in

2009.

        The plaintiffs claim that they need discovery in order to respond to the motion for

summary judgment the government filed after this court rejected the government’s

motion to dismiss. See Colonial Chevrolet Co., Inc. United States, 123 Fed. Cl. 134, 136

(2015). In the motion for summary judgment, the government argues among other things

that most of the GM plaintiffs’ claims are barred by a release they signed in exchange for

payments and other benefits in wind-down agreements offered by GM on June 1, 2009,

the day GM filed for bankruptcy. Although the government was not a party to the wind-

down agreements it argues that the releases in the wind-down agreements protect the

United States and bar the GM plaintiffs’ Fifth Amendment taking claims. The releases in

the wind-down agreements state in relevant part as follows:


                                              2
       Dealer . . . hereby releases, settles, cancels, discharges, and acknowledges
       to be fully satisfied any and all claims, demands, damages, debts; liabilities,
       obligations, costs, expenses, liens, actions, and causes of action of every
       kind and nature whatsoever . . . whether known or unknown, foreseen or
       unforeseen, suspected or unsuspected (“Claims”), which Dealer or anyone
       claiming through or under Dealer may have as of the date of the execution
       of this Agreement against GM, the 363 Acquirer, their Affiliates or any of
       their respective members, partners, venturers, stockholders, officers,
       directors, employees, agents, spouses, legal representatives, successors or
       assigns (collectively, the “GM Parties”), arising out of or relating to . . . the
       Dealer Agreements or this Agreement . . . or any other events, transactions,
       claims, discussions or circumstances of any kind arising in whole or in part
       prior to the effective date of this Agreement . . . .

Def.’s Reply App. A131 (ECF No. 181). The government argues that as the majority

shareholder in the new GM it is protected from all of the claims filed by those plaintiffs

that signed the wind-down agreements.

       According to the GM plaintiffs, they cannot respond to the government’s

contention that the releases they signed bar their claims without discovery into the

government’s role in overseeing the GM bailout and in drafting the wind-down

agreements. In this connection the plaintiffs contend that the releases do not cover their

claims but that if the releases are broad enough to bar their claims the releases are

unenforceable. Specifically they argue that the government misrepresented its role by not

identifying itself in the release and that the government placed plaintiffs under duress by

giving them only 12 days to review their wind-down agreements. The GM plaintiffs seek

to depose several former government officials who were instrumental in designing the

GM bailout. They also seek documents from the Special Inspector General for the

Troubled Asset Relief Program (“SIGTARP”). The GM plaintiffs also argue that in order

to respond to the government’s argument that their dealerships would have had no value


                                              3
without a government bailout, they seek discovery regarding the government’s ownership

of GM cars and trucks to establish the value of servicing government-owned GM cars

and trucks.

       After careful consideration, the court finds that the GM plaintiffs may conduct

limited discovery to determine the government’s role, if any, in the drafting of the wind-

down agreements in order to respond to the government’s contention that the releases bar

plaintiffs’ Fifth Amendment claims. However, the plaintiffs’ request for discovery into

whether the government endeavored to intentionally misrepresent its role in new GM in

order to induce plaintiffs to sign releases with old GM is denied. Plaintiffs have not

presented any basis for discovery into whether the government fraudulently

misrepresented its role in new GM or caused plaintiffs duress. In addition, the court finds

that the plaintiffs may also conduct limited discovery into the government’s fleet of GM

vehicles at the time of the bailout. Therefore, the plaintiffs’ renewed RCFC 56(d) motion

is GRANTED-IN-PART and DENIED-IN-PART. 1

I.     LEGAL STANDARDS

       Under RCFC 56(d), “[i]f a nonmovant shows by affidavit or declaration that, for

specified reasons, it cannot present facts essential to justify its opposition [to a motion for

summary judgment], the court may: (1) defer considering the motion or deny it; (2) allow




1
  The GM plaintiffs’ motion (ECF No. 260), filed June 2, 2017, for leave to supplement the
record with a video recording of Mr. Rattner from March 10, 2011 describing the restructuring of
Chrysler and GM is GRANTED.


                                               4
time to obtain affidavits or declarations or to take discovery; or (3) issue any other

appropriate order.”

       Interpreting the analogous Federal Rule of Civil Procedure, the Federal Circuit has

found that “[w]hen the discovery is reasonably directed to ‘facts essential to justify the

party’s opposition,’ . . . such discovery must be permitted or summary judgment

refused.” Opryland USA Inc. v. Great Am. Music Show, Inc., 970 F.2d 847, 852 (Fed.

Cir. 1992) (citations omitted).

       Ordinarily to meet this standard a plaintiff must:

       (1) specify the particular factual discovery being sought, (2) explain how
       the results of the discovery are reasonably expected to engender a genuine
       issue of material fact, (3) provide an adequate factual predicate for the
       belief that there are discoverable facts sufficient to raise a genuine and
       material issue, (4) recite the efforts previously made to obtain those facts,
       and (5) show good grounds for the failure to have discovered the essential
       facts sooner.

Theisen Vending Co. v. United States, 58 Fed. Cl. 194, 198 (2003).

II.    DISCUSSION

       A.     The GM Plaintiffs May Conduct Limited Discovery Regarding the
              Scope of the Release in the Wind-Down Agreement But Not Into Their
              Claims of Fraudulent Misrepresentation or Duress.

       While the GM plaintiffs argue as a matter of law that their releases do not cover

their Fifth Amendment claims, they also argue as a factual matter that the releases were

never intended to cover their constitutional claims against the United States. They argue

that discovery will show that the wind-down agreements did not extend to Fifth

Amendment takings claims.




                                              5
       The court agrees with the GM plaintiffs that they may conduct discovery regarding

the government’s role in the wind-down agreements in order to establish the intent of the

parties regarding the scope of the releases signed. This court has found that “[w]hen the

United States asserts its rights as a third party beneficiary to a private agreement,” in

particular with regard to a release, “the United States has the burden of showing that it is

entitled to those rights under the state law governing that agreement.” W. Chelsea

Buildings, LLC v. United States, 109 Fed. Cl. 5, 16-17 (2013) (citing United States v.

State Farm Mut. Auto. Ins. Co., 936 F.2d 206, 207 (5th Cir. 1991)). Under Michigan law,

which the court agrees with plaintiffs governs the wind-down agreements they entered

into with Old GM, “[i]f the text in the release is unambiguous,” the court “must ascertain

the parties’ intentions from the plain, ordinary meaning of the language of the release.”

Gortney v. Norfolk & W. Ry. Co., 549 N.W.2d 612, 614 (Mich. Ct. App. 1996) (citations

omitted). 2 A release is ambiguous “if its language is reasonably susceptible to more than

one interpretation.” Id. at 615 (citations omitted).

       Without resolving the merits of the government’s motion for summary judgment,

the court finds that where the United States is not identified by name and there is no

mention of constitutional claims, discovery into the scope of the release language is

appropriate, including discovery into the role of the United States, if any, in drafting the

release.


2
 The wind-down agreements state “[t]his Agreement shall be governed by, and construed in
accordance with, the laws of the state of Michigan.” E.g., Def.’s Reply App. A135 (ECF No.
181).


                                              6
       In their RCFC 56(d) motion, the GM plaintiffs also contend that, if the court finds

the releases extend to their constitutional claims, the releases in the wind-down

agreements are invalid on the grounds that they were obtained due to fraudulent

misrepresentation or duress. Under Michigan law, “[a] release is invalid if (1) the

releasor was acting under duress, (2) there was misrepresentation as to the nature of the

release agreement, or (3) there was fraudulent or overreaching conduct to secure the

release.” Brooks v. Holmes, 413 N.W.2d 688, 689 (Mich. Ct. App. 1987) (per curiam)

(citations omitted); Skotak v. Vic Tanny Int’l, Inc., 513 N.W.2d 428, 430 (Mich. Ct. App.

1994) (per curiam). Citing Michigan law, as required by the wind-down agreements, the

plaintiffs argue that they are seeking discovery to show that the releases are invalid on the

grounds that:

       (1) the defendant made a material representation, (2) it was false, (3) the
       defendant knew it was false when made, or made it recklessly, without
       knowledge of its truth and as a positive assertion, (4) it was made with the
       intention to induce reliance by the plaintiff, (5) the plaintiff acted in
       reliance upon it, and (6) the plaintiff thereby suffered injury.

State-William P’ship v. Gale, 425 N.W.2d 756, 761 (Mich. Ct. App. 1988).

       In affidavits filed with their discovery request, the GM plaintiffs state that they

relied on the statement of President Obama that the United States did not intend to run

GM and thus they were unaware of the extent of the government’s control over the

operations of GM, that the government intentionally concealed its role in GM at the time

they signed the wind-down agreements in order to induce them to sign the agreements,

and that they suffered injury because of the government’s actions.




                                              7
       The GM plaintiffs also argue that the releases are void on the grounds of economic

duress because the plaintiffs were subject to a wrongful act or threat that deprived them

of their unfettered will and they had no adequate legal remedy available. Pl.’s Mot. 22

(quoting Barnett v. International Tennis Corp., 263 N.W.2d 908 (Mich. Ct. App. 1978)).

Specifically, the GM plaintiffs assert that they felt coerced due to “the short time frame in

which they had to sign the wind-down agreements.” Id. at 23 (citing plaintiffs’

affidavits). For example, Ms. VanderMeer states in her affidavit that she believes the

short time frame was imposed on her “to prevent me from discovering the true role of the

Federal government in terminating my dealership” and that it prevented her “from

obtaining proper legal advice and from allowing an attorney to examine the wind-down

agreement and liability release agreement and advising me of the true nature of the claims

and rights I was giving up by signing the agreements.” Ms. VanderMeer states that she

believes “this was done intentionally by the Federal government officials who I did not

know at the time were operating and managing GM.” Mr. Gibson adds in his affidavit

that he felt his “choices at the time, when facing the death of my dealership, were

between shooting it in the head and suffering an immediate death or shooting it in the

stomach and suffering a delayed death.”

       To invalidate a release clause on the grounds of misrepresentation, “a

misrepresentation must be made with the intent to mislead or deceive.” Castillo v.

Vannuil, No. 323581, 2015 WL 6161860, at *4 (Mich. Ct. App. Oct. 20, 2015) (per

curiam) (citing Paterek v. 6600 Ltd., 465 N.W.2d 342, 345 (Mich. Ct. App. 1990) (per

curiam)). “An innocent misrepresentation is insufficient to invalidate a release.” Pape v.


                                             8
Dobronski, No. 320552, 2015 WL 3448727, at *2 (Mich. Ct. App. May 28, 2015)

(quoting Hungerman v. McCord Gasket Corp., 473 N.W.2d 720 (Mich. Ct. App. 1991)).

       Under Michigan law, each element of misrepresentation “must be proved with a

reasonable degree of certainty, and all of them must be found to exist; the absence of any

one of them is fatal to a recovery.” Titan Ins. Co. v. Hyten, 817 N.W.2d 562, 567-68

(Mich. 2012) (citations omitted); see also In re Complaint of Rovas Against SBC Mich.,

754 N.W.2d 259, 283 (Mich. 2008) (citing Hi–Way Motor Co. v. Int’l Harvester Co., 247

N.W.2d 813 (Mich. 1976); Candler v. Heigho, 175 N.W. 141 (Mich. 1919)).

       Michigan courts have found that to satisfy the first element, generally,

representations must be “statements of past or existing fact, rather than future promises or

good-faith opinions.” Cooper v. Auto Club Ins. Ass’n, 751 N.W.2d 443, 452 (Mich.

2008) (citing Hi-Way Motor Co., 247 N.W.2d 813; Danto v. Charles C. Robbins, Inc.,

230 N.W. 188 (Mich. 1930); Foreman v. Foreman, 701 N.W.2d 167 (Mich. Ct. App.

2005); see also Delta Props., Inc. v. Motor Wheel Corp., No. 177965, 1997 WL

33343966, at *2 (Mich. Ct. App. Sept. 9, 1997) (“Future promises” or “an expression of .

. . anticipated action . . . are not actionable in tort.” citing Hi-Way Motor Co., 247

N.W.2d at 817)); State-William, 425 N.W.2d at 761 (finding that statements about the

probability of a lease were opinions, not misrepresentations of fact). “[A] promise made

in bad faith without intention of performance” can only serve as the basis for a fraudulent

misrepresentation claim if “evidence of fraudulent intent . . . relate[s] to conduct of the

actor at the very time of making the representations, or almost immediately thereafter.”

Hi-Way Motor Co., 247 N.W.2d at 816-17 (citations omitted).


                                              9
       With regard to the second element, statements must be “objectively false or

misleading.” Cooper, 751 N.W.2d at 452 (citing Hord v. Envtl. Research Inst. of Mich.,

617 N.W.2d 543 (Mich. 2000) (per curiam)).

       With regard to the third and fourth elements, the plaintiff must show “(1)

knowledge of falsity or reckless disregard of the truth or falsity of a statement, and (2) an

intent that a person detrimentally rely on the statement.” In re Complaint of Rovas

Against SBC Mich., 754 N.W.2d at 278. With regard to alleged misrepresentation

regarding a release, “the failure to specifically draw another’s attention to a particular

clause of a contract” does not amount to a misrepresentation “made with the intent to

mislead or deceive.” Castillo, 2015 WL 6161860, at *4. “Quite the contrary, it is the

responsibility of one signing an agreement to know and understand its contents.” Id.

(citing Scholz v. Montgomery Ward & Co., 468 N.W.2d 845 (Mich. 1991)). “The

purpose of the fraudulent conduct must be to secure the release.” Gonzalez v. Rusty

Wallace Racing Experience, No. 319471, 2015 WL 159490, at *3 (Mich. Ct. App. Jan.

13, 2015) (citing Brooks v. Holmes, 413 N.W.2d 688 (Mich. Ct. App. 1987)), appeal

denied, 870 N.W.2d 722 (Mich. 2015).

       With regard to the fifth element, the evidence must demonstrate that the alleged

misrepresentation was at least “a contributing influence upon plaintiff’s decision.”

McKinstry v. Valley Obstetrics-Gynecology Clinic, P.C., 405 N.W.2d 88, 97 (Mich.

1987). However, the plaintiff’s actions in reliance upon the misrepresentation must be

reasonable. Zaremba Equip., Inc. v. Harco Nat’l Ins. Co., 761 N.W.2d 151, 165 (Mich.

Ct. App. 2008) (citing Novak v. Nationwide Mut. Ins. Co., 599 N.W.2d 546, 554 (Mich.


                                              10
Ct. App. 1999)). A plaintiff cannot ignore contradictory information. Titan Ins. Co., 817

N.W.2d at 568 n.4 (citations omitted). “[F]raud cannot be ‘perpetrated upon one who has

full knowledge to the contrary of a representation.’” Cooper, 751 N.W.2d at 451

(quoting Montgomery Ward & Co. v. Williams, 47 N.W.2d 607 (Mich. 1951)).

       Lastly, Michigan courts have explained that the alleged injury must occur “as a

consequence” of the fraudulent misrepresentation. Cooper, 751 N.W.2d at 452 (citing

Hi-Way Motor Co., 247 N.W.2d 813).

       With regard to plaintiffs’ duress argument, Michigan courts have long held that

“[d]uress exists when one by the unlawful act of another is induced to make a contract or

perform some act under circumstances which deprive him of the exercise of free will.”

Norton v. Michigan State Highway Dep’t, 24 N.W.2d 132, 135 (Mich. 1946) (quoting

Hackley v. Headley, 8 N.W. 511, 512-13 (Mich. 1881)). “Fear of financial ruin alone is

insufficient to establish economic duress; it must also be established that the person

applying the coercion acted unlawfully.” Apfelblat v. Nat’l Bank Wyandotte-Taylor, 404

N.W.2d 725, 728 (Mich. Ct. App. 1987).

       Given these legal standards, the GM plaintiffs have not demonstrated any grounds

for allowing discovery into whether the subject releases were obtained through fraudulent

misrepresentation or duress. First and foremost, there is no evidence to support plaintiffs’

assertion that President Obama’s statement regarding “running GM” was a

misrepresentation intended to mislead plaintiffs into signing the releases in the wind-

down agreements. President Obama’s remarks were not false or misleading. In the

remarks referenced by the GM plaintiffs, entitled “Remarks by the President on General


                                             11
Motors Restructuring,” dated June 1, 2009, President Obama expressly stated that the

government was becoming a majority stockholder in GM. He stated that “our

government will be making a significant additional investment of about $30 billion in

GM -- an investment that will entitle American taxpayers to ownership of about 60

percent of the new GM.” He then explained that in “taking so much stock in GM . . . we

are acting as reluctant shareholders,” and that “[t]he federal government will refrain from

exercising its rights as a shareholder in all but the most fundamental corporate decisions.”

Importantly, he concluded by explaining that:

       Building a leaner GM will come at a cost. . . . So I want to say a word
       directly to all the men and women watching today, wondering what all of
       this will mean as far as their own lives are concerned. . . More dealerships
       will shut their doors . . . .

       These public remarks make absolutely clear that the government played a crucial

role in the bailout of GM and became a stockholder in the post-bankruptcy company.

Plaintiffs cannot claim based on the public statements of President Obama that the

government misled them as to the United States’ role in the GM bailout. Accordingly,

even if plaintiffs are correct that the government “played down” its role in the day-to-day

management of GM, Pls.’ Reply 8 (ECF No. 244), that is not sufficient to overcome the

fact that nothing in President Obama’s remarks, which plaintiffs rely on, were false or

misleading. President Obama made it clear the United States was becoming a controlling

stockholder and that some dealerships would be closing.

       In addition, the fact that the plaintiffs’ attention was not drawn to the language in

the release clause or to the United States’ role as a stockholder is irrelevant to show



                                             12
misrepresentation as a basis for discovery. Under Michigan law, it was the plaintiffs’

responsibility to know and understand the contents of the agreements. “[O]ne who signs

a contract will not be heard to say, when enforcement is sought, that he did not read it, or

that he supposed it was different in its terms.” Wilkie v. Auto-Owners Ins. Co., 664

N.W.2d 776, 786 (Mich. 2003) (quoting Farm Bureau Mut. Ins. Co. of Michigan v.

Nikkel, 596 N.W. 915, 920 (Mich. 1999)).

       With regard to their duress argument, plaintiffs’ reliance on Barnett v. Int’l Tennis

Corp., 263 N.W.2d at 913, is misplaced. In Barnett, 263 N.W.2d at 913, the Court of

Appeals of Michigan quoted the longstanding rule from Hackley v. Headley, 8 N.W. 511

at 512, that “[d]uress exists when one by the unlawful act of another is induced to make a

contract or perform some act under circumstances which deprive him of the exercise of

free will.” Plaintiffs cite only the “basic elements” of duress that the Barnett court

quoted from Professor Williston’s treatise on contracts. Moreover, plaintiffs rely entirely

on the short time frame the plaintiffs had to decide whether to execute the wind-down

agreements. The plaintiffs have not shown or even alleged that the government engaged

in any unlawful act and therefore the plaintiffs’ proposed discovery cannot be reasonably

expected to result in evidence showing that the plaintiffs were “induced by any unlawful

act of [the United States] to make a contract under circumstances which deprived them of

their free will.” Barnett, 263 N.W.2d at 913.

       In sum, plaintiffs have not provided any grounds to support their claims of

fraudulent misrepresentation or duress. Their affidavits fail to provide a basis for

discovery under Michigan law standards for fraudulent misrepresentation or duress. In


                                             13
such circumstances, plaintiffs’ request for discovery in order to prove duress or that the

government made a material misrepresentation must be denied.

          B.    Limited Discovery Regarding the Government’s GM Fleet Will Be
                Allowed.

          In its motion for summary judgment, the government argues that the claims by the

GM plaintiffs that did not sign wind-down agreements with releases should be barred on

the grounds that the benefits offered through the wind-down agreements were equal to or

greater than what those GM plaintiffs would have received had GM been liquidated in an

orderly bankruptcy proceeding.

          The GM plaintiffs argue that they need discovery regarding the government’s plan

for servicing its fleet of GM vehicles to show that the dealerships of the six named

plaintiffs who did not sign the wind-down agreements had more value than what they

were offered by GM as part of the wind-down agreements. Pl.’s Mot. 29. Plaintiffs have

provided an affidavit from their expert, Edward M. Stockton, vice president and director

of economics services for The Fontana Group, Inc., in which Mr. Stockton states that

plaintiffs asked him “to establish to a reasonable degree of scientific certainty the value

of certain General Motors (“GM”) dealerships at and around the time they were

terminated in approximately 2009.” Pls.’ Mot. App. B at 2. In his affidavit Mr. Stockton

states:

          In order to valuate these GM Dealerships fully and fairly from an economic
          standpoint, it is necessary to consider sufficient information to inform the
          analysis across the realm of potential material profit sources for the
          franchise. That information includes an accounting of the fleet of GM
          vehicles in the possession of the federal government at and around the time
          of the GM dealership terminations.


                                               14
Id. at 3. According to Mr. Stockton, this information is necessary because (1)

maintenance was a large portion of GM Plaintiffs’ business models, (2) the government

fleet was large and therefore significant, (3) this information is not publicly available, and

(4) the government fleet affected the value of all GM Plaintiffs’ dealerships regardless of

whether the specific dealership being valuated ever actually serviced any federal GM

vehicles. App. B at 3-4.

       In its response the government asserts that this discovery request must be denied

on the grounds that the plaintiffs already possess information regarding the number of

government vehicles serviced by or purchased from plaintiffs’ dealerships and

information about government vehicles is publicly available in the General Service

Administration’s “Federal Fleet Report.”

       The court agrees with the plaintiffs that they may conduct discovery regarding the

government’s plan for servicing its fleet of GM vehicles. The plaintiffs argue that they

require discovery regarding not only their own dealerships. In addition, the General

Service Administration’s “Federal Fleet Report” relied upon by the government does

contains detailed information on the government’s inventory of vehicles, including

whether those vehicles are owned or leased, the costs of operating the vehicles, and how

many vehicles were purchased by the government in 2009, but it does not contain the

information the plaintiffs seek regarding GM vehicles.

III.   CONCLUSION

       For the reasons above, the GM plaintiffs’ motion for discovery pursuant to RCFC

56(d) is GRANTED-IN-PART and DENIED-IN-PART.


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       The plaintiffs shall have until June 30, 2017 to file proposed discovery requests

consistent with this order together with a proposed schedule for discovery and finalizing

briefing on the government’s motion for summary judgment with regard to the GM

plaintiffs. If the parties cannot agree, the government shall have until July 14, 2017 to

file a response.

       IT IS SO ORDERED.



                                                          s/Nancy B. Firestone
                                                          NANCY B. FIRESTONE
                                                          Senior Judge




                                            16
