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Judge allows DealMaker to amend action against auto manufacturer

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A federal judge has denied American Honda Motor Co. Inc.’s motion to dismiss a multi-million-dollar lawsuit brought by DealMaker Auto Group and has approved the filing of an amended complaint by the Watertown business.

Senior Judge Frederick J. Scullin Jr. entered his decision Wednesday in U.S. District Court, Syracuse, giving DealMaker the chance to file a more detailed action against Honda. The company tried to get the suit dismissed, claiming in part that the action did not state a valid claim for which the court could rule in favor of DealMaker.

“I felt we always had a strong case against American Honda Motor Company, and I think that by being allowed to file an amended complaint and plead it with more specificity, it becomes stronger,” said P.J. Simao, managing member of DealMaker. “I’m looking forward to our day in court.”

DealMaker filed suit in June 2012, seeking $110 million in damages, although the amended complaint now asks for at least $37 million. At issue is DealMaker’s contention that Honda “forced” DealMaker to open its Potsdam dealership in November 2008 “in the worst economic climate in decades,” with the slow winter sales season approaching and with DealMaker’s proposed manager, who had previously managed DealMaker’s Honda store in Watertown, out on sick leave. DealMaker claims the combination of factors was “a recipe for disaster.”

“The forced opening of DealMaker Potsdam during that period of time caused significant losses not only to DealMaker Potsdam but to DealMaker Watertown because it exhausted financial and personnel resources from DealMaker Watertown leading to the demise of both DealMaker Entities,” it is claimed in the amended complaint.

According to the complaint, Mr. Simao met with Honda representatives to voice his concerns, and the company was aware he was also in negotiations to sell both dealerships. It is claimed that, despite assurances that Honda would either assist in the sales of the dealerships or otherwise help DealMaker work through its financial difficulties, Honda notified DealMaker that it was in violation of its floor-plan financing agreement, meaning DealMaker was unable to bring in new inventory. Honda ultimately ended DealMaker’s franchise agreement, leaving the car manufacturer without a certified dealer between Syracuse and Plattsburgh.

Mr. Simao also claims that two of his real estate companies, Prime LLC and Onondaga Development LLC, suffered damages as a result of Honda’s alleged insistence that the franchise on Route 56 in Potsdam open prematurely. The Potsdam location was a tenant of Prime, while the Route 11 location in the town of Watertown was a tenant of Onondaga Development. The Potsdam dealership was supposed to pay Prime $36,000 monthly in rent to cover Prime’s other costs associated with establishing the site as a Honda dealership, including $24,000 in monthly mortgage payments, according to the complaint.

The amended complaint also claims that Mr. Simao personally “suffered enormous and foreseeable economic injuries” as a result of Honda’s alleged actions. The initial lawsuit contained 11 causes of action for which DealMaker sought $10 million each in damages, while the amended complaint contains eight causes of action, each of which seeks at least $4 million in damages.

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