A California court has dismissed a Volvo distributor’s lawsuit against a Honolulu dealership.

The U.S. District Court for the Central District of California ruled Wednesday that Volvo Car USA improperly filed suit against Envy Hawaii LLC, which does business as Volvo Cars Honolulu. The court ruled that the suit should not have been filed in the California court.

Volvo Car USA’s suit was filed immediately after the dealership demanded that the manufacturer cease its “long-standing practice of arbitrarily inflating vehicle sales figures and forcing the dealership to accept inventory well beyond actual sales demand,” Volvo Cars Honolulu said in a news release Wednesday. The dealership claims that this practice, known in the automobile industry as “punching,” is misleading because it creates the appearance of continued growth and impressive sales.

Days after the California lawsuit was filed, Envy was informed by the state of Hawaii that Volvo Car USA failed to file its distributor license and that the Honolulu dealership would not be allowed to sell new cars in Hawaii until the distributor corrected the problem and the license was approved. Envy worked with the state and the license was approved a few weeks later.

The ruling in California will enable the dealership to litigate its claims against the distributor in Hawaii. Volvo Cars Honolulu remains open for business.