Rochester Ford v . Ford Motor C o . CV-99-559-M 06/21/01 UNITED STATES DISTRICT COURT

DISTRICT OF NEW HAMPSHIRE

Rochester Ford Sales, Inc.; and Meredith S . Pierce, Trustee of J. Pierce Trust, Plaintiffs

v. Civil N o . 99-559-M Opinion N o .

Ford Motor Company, Defendant

O R D E R

Having considered defendant’s motion for summary judgment

(document n o . 24) on the remaining claims, plaintiff’s objection

and memorandum of law (documents n o . 2 7 , 2 8 ) , and the oral

arguments presented, the court grants defendant’s motion.

Two claims remain in this case. Counts II and IV of the

amended complaint assert that Defendant Ford Motor Company

(“Ford”) violated provisions of New Hampshire’s Regulation of

Business Practices Between Motor Vehicle Manufacturers,

Distributors, and Dealers Act. Count II alleges violation of the

current version of the Act, N.H. Rev. Stat. Ann. (“RSA”) ch. 357-

C , while Count IV makes the same allegations, but under the

predecessor (repealed) Act, RSA ch. 357-B. The gist of plaintiff’s claim is that Ford “unreasonably

withheld” its consent to plaintiff’s proposed sale of its Ford

dealership to an identified buyer, resulting in a substantial

financial loss given the difference between what the proposed

buyer offered to pay and what the eventual Ford-approved buyer

actually paid. See e.g., RSA 357-C:3, I , and III ( n ) . The same

allegations were made in support of a breach of contract claim as

well but, because suit was not filed within the applicable three

year limitations period, the contract count was previously

dismissed. The limitations period applicable to suits brought

under RSA ch. 357-C is four years, however, and Counts II and IV

were timely filed.

Ford moves for dismissal of Count IV on grounds that RSA ch.

357-B was repealed in 1981, and it moves for summary judgment as

to both Counts II and IV on grounds that plaintiff previously

released Ford “from any and all . . . liability . . . with

respect to all relationships and actions . . . however claimed to

arise” (with a few exceptions not pertinent here). Ford Sales

and Service Agreement, ¶ 2 3 , Exhibit 1 1 , Plaintiff’s Opposition

to Summary Judgment (document n o . 2 7 ) . Ford does not challenge

the applicability of RSA ch. 357-C, and the court is satisfied

2 that its provisions do inure to plaintiff’s benefit relative to

Ford and are substantively identical to those contained in the

repealed RSA ch. 357-B, at least as relevant here. See

generally, Ford Motor Company v . Meredith Motor Company, Inc.,

Civil N o . 97-456-B, Opinion N o .

(August 2 4 , 2000).

Accordingly, Count IV is dismissed for failure to state a claim.

Defendant’s motion for summary judgment is determined

according to familiar standards. When “the pleadings,

depositions, answers to interrogatories, and admissions on file,

together with the affidavits, if any, show that there is no

genuine issue as to any material fact and that the moving party

is entitled to judgment as a matter of law,” summary judgment is

appropriate. Fed. R. Civ. P. 56(c). The party seeking summary

judgment must first demonstrate the absence of a genuine issue of

material fact in the record. See Celotex Corp. v . Catrett,

(1986); DeNovellis v . Shalala,

(1st Cir. 1997). “[A]n issue is ‘genuine’ if the evidence

presented is such that a reasonable jury could resolve the issue

in favor of the nonmoving party and a ‘material’ fact is one that

might affect the outcome of the suit under governing law.”

Fajardo Shopping Ctr. v . Sun Alliance Ins. Co.,

, 7

3 (1st Cir. 1999). A party opposing a properly supported motion

for summary judgment must present competent evidence of record

that shows a genuine issue for trial. See Anderson v . Libberty

Lobby, Inc.,

(1986); Torres v . E.I. Dupont

De Nemours & Co.,

3 , 18 (1st Cir. 2000).

Factual Background

Although plaintiff contends that much is disputed, there

does not appear to be any genuine dispute as to material facts.

It is agreed that in December of 1995, Ford refused its consent

to a proposed sale of plaintiff’s dealership to Rochester Lincoln

Mercury, Inc. (Under the terms of the pertinent agreement Ford’s

approval was required before the dealership could be sold.)

Plaintiff’s owners were disappointed by Ford’s refusal to

consent, and believed that refusal gave rise to claims against

Ford for breach of contract and violation of the provisions of

RSA ch. 357-C (particularly RSA 357-C:3,I, which prohibits “bad

faith, or unconscionable” action and section 3 , III(n), which

prohibits “unreasonable restrictions” on dealership transfers).

Nevertheless, plaintiff continued to seek other buyers and,

on January 2 3 , 1998, executed an agreement to sell the dealership

4 to Dennis Roberts and Kevin Donovan. Exhibit 1 , Plaintiff’s

Opposition (document n o . 2 7 ) . Ford approved that sale and, to

facilitate the dealership transfer, plaintiff voluntarily

terminated its Ford Sales and Service Agreement. Defendant’s

Motion for Summary Judgment, Exhibit B (document n o . 2 4 ) .

Plaintiff also elected a parts repurchase option available to it

under the agreement, making demand, in its written notice of

termination, that Ford “purchase or accept upon return from the

[plaintiff], in return for [its] general release” unused,

undamaged, and unsold parts on hand. See id.; Plaintiff’s

Objection to Summary Judgment, Exhibit 11 (document 2 7 ) .

Plaintiff assigned that parts buy back option to the purchaser of

its Ford dealership.

Exhibit 1 , p . 3 . (“Termination rights

for vehicles and parts returnable under the Dealer Sales and

Service Agreement with Ford Motor Corporation shall accrue to

Buyers at the option of the Buyers.”). And, consistent with the

terms of its Ford dealership agreement, plaintiff executed and

delivered a written general release in favor of Ford, in exchange

for the parts buy back option and right of assignment. See

Defendant’s Motion for Summary Judgment, Exhibit B and Exhibit C .

5 After closing the sale of its dealership, plaintiff brought

this suit against Ford, the remaining count of which alleges that

Ford violated the protective provisions of RSA ch. 357-C.

Discussion

The dispositive question presented by Ford’s summary

judgment motion is rather straight-forward: Is plaintiff bound

by the terms of its general release? There is little doubt that,

on its face, plaintiff’s release precludes this suit. Plaintiff

argues, however, that the release is not binding for two basic

reasons. First, it says the release is not supported by adequate

consideration, and, second, it claims the release was coerced, or

the product of duress.

Plaintiff’s first contention is without merit. The

Dealership Agreement very clearly provided plaintiff with an

option relative to parts repurchase upon its voluntary

termination of the dealership agreement: (1) it could either

elect to put the eligible parts back to Ford (or assign that

right to its purchaser), in exchange for a general release of all

claims against Ford (except for a few defined matters not

pertinent here); or (2) it could elect to keep the parts and/or

6 sell them to others, giving no release to Ford, and retaining the

right to sue Ford on any claims plaintiff might have.

Plaintiff elected the repurchase option and assigned those

rights to its purchaser. Plaintiff also executed and delivered

the general release called for by the contract.1 The

consideration given by Ford for the release was its agreement to

buy back, at plaintiff’s option, eligible parts from plaintiff’s

stock, either from plaintiff or plaintiff’s assignee, which

consideration was adequate to support the general release

obligation. See Hyman v . Ford Motor Company, supra, n.1; Grand

Motors, Inc. v . Ford Motor Co.,

4 , 39-40 (W.D.Mo.

1982).

Plaintiff also suggests that the parts buy back option was

little more than an illusory promise because New Hampshire law

independently required Ford to buy back qualifying parts upon

termination of the dealership agreement. But, the statutory

1 RSA 357-C:3,III(m) prohibits manufacturers from requiring “a motor vehicle dealer to assent to a release . . . which would relieve any person from liability” under the statute. But that provision is inapplicable here since Ford did not “require” a release of liability as a condition of the dealership relationship, but bargained for a release supported by adequate consideration at the dealer’s option. See, e.g., Hyman v . Ford Motor Company, __ F. Supp. 2d __,

(D.S.C. February 2 2 , 2001).

7 provision on which plaintiff relies, RSA 357-C:7,VI(b), only

applies to involuntary termination or nonrenewal by the

manufacturer, not voluntary termination by the dealer, as was the

case here. See, e.g., Mazda Motors of America, Inc. v .

Southwestern Motors, Inc.,

(N.C. 1979). The

language of RSA 357-C:7 is plain and unambiguous, and its words

and phrases are to be given their usual and common meaning. See

Appeal of Booker,

(1995); In re Cote,

(1999). Section 7 unambiguously describes the limitations on a

manufacturer’s ability to terminate or decline to renew a

franchise relationship with a licensed new motor vehicle dealer,

and subsection VI(b) plainly requires a manufacturer to pay the

dealer cost of certain parts or accessories “[w]ithin 90 days of

the valid termination or nonrenewal with notice, in good faith,

and for good cause . . .” to the terminated dealer. The earlier

subsections preclude manufacturers from terminating or failing to

renew dealership relationships unless good cause exists

(subsection I ) ; notice has been given (subsection V ) ; the action

was taken in good faith (subsection I ) ; etc. Consequently, the

statutory repurchase provisions do not duplicate the contractual

repurchase provisions — the statutory provisions only apply when

8 the manufacturer terminates the dealership relationship.

Plaintiff’s contrary reading is simply not supported by the plain

language of the statutory provisions.

Plaintiff had and made choices under the agreement,

presumably after having considered its options and the likely

consequences of its decisions. At the time, it no doubt decided

that it was economically advantageous to sell the inventory to

its buyers along with an assigned option permitting the buyers to

return unwanted and eligible parts to Ford for repurchase. In

order to acquire that buy back option, however, plaintiff

necessarily released Ford from any and all liability arising out

of their prior relationship.

Plaintiff’s second point is equally without merit. The

record does not support plaintiff’s coercion claim, and suggests

that plaintiff might be confused about the event triggering its

general release of Ford. Paragraph 21 of the Dealership

Agreement provides as follows:

2 1 . Upon termination or nonrenewal of this agreement by the Company [Ford], the Dealer [Plaintiff] may elect as provided in Paragraph 23 o r , upon termination or nonrenewal of this agreement by the Dealer, the Dealer may demand in his notice of termination or nonrenewal, to have the

9 Company purchase or accept upon return from the Dealer, in return for his general release specified in Paragraph 2 3 :

. . . 21.(b) Genuine Parts. Each unused, undamaged and unsold GENUINE PART, . . . [etc.] [emphasis supplied]

Paragraph 21.(g) of the agreement provides for an assignment of

the repurchase rights extended in Paragraph 2 1 , and reiterates

the accompanying general release obligation:

21.(g) Assignment of Benefits. As an assist to the Dealer in effecting an orderly transfer of his assets to a replacement dealer and to minimize possible interruptions in customer convenience and service, in the event of a termination or nonrenewal by either party, any rights or benefits with respect to subparagraphs 21(a), 21(b), 21(c) and 21(d), herein may be assigned by the Dealer to anyone to whom the Dealer has agreed to sell the respective property and whom the Company has approved as a replacement for the Dealer. Such assignments will be subject to Dealer’s fulfillment of his obligations under paragraph 19 and this paragraph 21 and subject to the Dealer’s tender of a general release as specified in paragraph 2 3 . [emphasis supplied.]

Paragraph 23 describes options extended to the Dealer in the

event Ford terminates or declines to renew the dealership

agreement, and goes on to provide, in pertinent part:

10 Upon the Dealer’s election to accept any of such benefits, or upon the Dealer’s demand of any such benefits upon any termination or nonrenewal by the Dealer, the Company shall be released from any and all other liability to the Dealer with respect to all relationships and actions between the Dealer and the Company, however claimed to arise, [except as to matters not relevant here]. Simultaneously with the receipt of any benefits so elected or demanded, the Dealer shall execute and deliver to the Company a general release . . . satisfactory to the Company. [emphasis supplied]

As noted, plaintiff unequivocally elected (and assigned) the

repurchase benefits described in Paragraph 2 1 , and made demand

for those benefits in its written notice of termination.

Accordingly, “upon [plaintiff’s] demand of . . . such benefits,”

Ford was “released from any and all other liability to the

[plaintiff] with respect to all relationships and actions between

the [plaintiff] and [Ford], however claimed to arise.”

Plaintiff, “simultaneously” with its demand for those benefits,

became obligated to execute and deliver a general release.

The record leaves no doubt that plaintiff voluntarily

terminated its dealership agreement, made demand for repurchase

benefits in its written notice of termination, assigned those

rights to its Ford-approved purchaser to assist in the transfer

11 of plaintiff’s assets, and, as required by contract, executed and

delivered a general release that plainly released any breach of

contract claim, or claim based on alleged violations of RSA ch.

357-C, arising from Ford’s earlier refusal to approve a

prospective purchaser of plaintiff’s dealership. The terms of

paragraph 23 are unambiguous — Ford was effectively released upon

plaintiff’s demand for the repurchase benefits; the subsequent

written release served merely to memorialize the automatic

release triggered by plaintiff’s demand, and the release was

effective relative to the remaining claim in this case. See

DeValk Lincoln Mercury, Inc. v . Ford Motor Company,

(7th Cir. 1987).

Accordingly, plaintiff’s contention that the written release

form was later “coerced” (i.e., after the release effected by

plaintiff’s demand for repurchase benefits) is of no moment,

because Ford was automatically released when written demand was

made by plaintiff in its voluntary notice of termination. In any

event, the record does not support a claim of legal coercion.

Ford was entitled under the dealership agreement to a written

release and was within its rights to insist upon i t . Plaintiff

was certainly free under the agreement to elect not to demand

12 repurchase benefits and retain any causes of action it might have

had against Ford, but Ford was equally entitled to offer

repurchase benefits in exchange for a general release. Whether

plaintiff’s choice was wise or unwise in hindsight is beside the

point; its choice was voluntary and uncoerced. See e.g. Schmitt-

Norton Ford, Inc. v . Ford Motor Company,

(D. Minn. 1981); Grand Motors, Inc., et a l . v . Ford Motor

Company, 564 F.Supp. at 4 1 ; Devalk Lincoln Mercury Inc. v . Ford

Motor Co.,

.

Conclusion

The terms of the dealer franchise agreement at issue are

plain and unambiguous. Plaintiff elected repurchase benefits

under the agreement, thereby triggering a general release

obligation, and plaintiff’s election was not the product of

economic coercion or duress. There appears to be no genuine

issue as to any material fact and, given the facts as

established, defendant is entitled to judgment as a matter of

law. Defendant’s motion for summary judgment on Count II is

granted.

13 Count IV is dismissed. Judgment shall be entered in favor

of defendant on Count I I , and the case shall be closed.

SO ORDERED.

Steven J. McAuliffe United States District Judge

June 2 1 , 2001

cc: Brian R. Barrington, Esq. Daniel A . Laufer, Esq. James E . Higgins, Esq. Nicholas T . Christakos, Esq.

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