In a recent decision, the California New Motor Vehicle Board (Board) held a dealer's waiver of its right to protest a proposed add point under Vehicle Code section 3062 is enforceable. Santa Monica Auto Group v. Infiniti West [sic], a Division of Nissan North America, Inc., Protest No. PR-2330-12 (Decision - July 16, 2012). Maurice Sanchez and Kevin Colton of Baker Hostetler's Costa Mesa office briefed and argued the case for Infiniti.

On September 24, 2010, Santa Monica Auto Group dba Santa Monica Infiniti (SMI) signed a Dealer Agreement with Infiniti and simultaneously executed a letter containing a written waiver agreement (Waiver). The Waiver stated that SMI was relinquishing its right to file a protest or any other legal action to prevent or delay the appointment of a new Infiniti dealership in Beverly Hills, and that good cause existed for the appointment. In March 2012, Infiniti gave notice to the Board and SMI of its intent to open the new Beverly Hills dealership. Later that same month, SMI filed a protest under Vehicle Code section 3062.

Infiniti filed a Motion to Dismiss the protest based on the 2010 Waiver, citing DaimlerChrysler v. Lew Williams, Inc. 142 Cal. App.4th 344 (2006), (a case that had not originated with the Board) which held a dealer's protest waiver enforceable. SMI argued in response that: (1) the Board had no power to grant a summary adjudication based on the waiver issue, as the statute requires a full merits hearing; (2) the Waiver was not enforceable under Vehicle Code section 11713.3(g), (3) the Waiver should be barred as parole evidence that could not modify the terms of the Dealer Agreement and (4) Lew Williams was distinguishable, because the Waiver signed by SMI was not supported by consideration separate and apart from the Dealer Agreement.

The Board rejected all of SMI's arguments. Specifically, the Board confirmed its ability to dismiss protests summarily, based on other, non-waiver based Board dismissals that had been upheld by the courts, in cases cited by Infiniti. In addition, SMI's reliance on the current version of section 11713.3(g) was inappropriate because that provision specifically exempts waivers entered into prior to January 1, 2012. The version of Section 11713.3(g) in effect when the waiver was signed, on the other hand, did not bar the enforceability of a voluntary waiver of protest rights under Section 3062. Here, SMI was not "required" to sign the Waiver; it could have simply declined the opportunity to become an Infiniti dealer. Moreover, the Board found that the parole evidence rule did not apply because the Waiver did not contradict any term in the Dealer Agreement and the Dealer Agreement specifically allows for modification by written agreement of the parties. Finally, the Board determined that Infiniti's appointment of SMI as a dealer was adequate consideration to support the Waiver. Consequently, SMI's protest was dismissed.


Effective January 1, 2012, Section 11713.3(g) was amended to include a list of specific items to be contained in an enforceable waiver of rights to protest an establishment under Section 3062 when given outside of the context of settling a pending protest or lawsuit. Specifically, the statute recognizes the enforceability of such waivers, if supported by consideration other than the grant or renewal of a franchise agreement, and if the waiver contains all of the following:

  1. approximate address of the proposed dealership;
  2. the planning potential used to establish the proposed dealership's facility, personnel and capital requirements;
  3. a projection of vehicle and parts sales, and the approximate number of vehicles to be serviced at the proposed dealership;
  4. approximate percentage of ownership by the manufacturer, or an affiliate, if any, in the proposed dealership or the real property on which it will sit;
  5. line-makes to be represented at the proposed dealership;
  6. identity of the proposed dealer, if it is known at the time the waiver is entered; and
  7. expiration date for the waiver agreement, which cannot be more than 30 months after it is executed.

Despite having executed a waiver meeting these criteria, the statute allows a dealer to file a protest to challenge the enforceability of the waiver if any of the information provided by the manufacturer later becomes "materially inaccurate." The manufacturer has the burden of proof to establish the enforceability of a waiver, which issue shall be determined by the New Motor Vehicle Board. We would counsel extreme caution with respect to the information provided in any such waiver, because if the information is claimed to be materially inaccurate after the new dealer is appointed, these representations could form the basis of a court claim for damages.

In addition to addressing waivers of protest rights with regard to establishments, the new statute also addresses the enforceability of waivers concerning evidence to be used in a protest, termination, arbitration, incentive payments, and exclusive facilities, personnel or display space.