Lally v. American Isuzu Motors, Inc., Unpublished Decision (6-29-2006)
Lally v. American Isuzu Motors, Inc., Unpublished Decision (6-29-2006)
Opinion of the Court
OPINION
{¶ 1} Appellants, Mike Lally and Tim Lally Chevrolet, Inc. dba Lally Isuzu (collectively "Lally"), appeal from the judgment of the Franklin County Court of Common Pleas affirming an order of the Ohio Motor Vehicle Dealers Board ("OMVDB") denying Lally's request for attorney fees and litigation costs. We affirm.{¶ 2} This appeal is the culmination of seven years of administrative proceedings and appeals over Lally's entitlement to an award of attorney fees pursuant to R.C.
{¶ 3} Tim Lally Chevrolet, Inc. dba Lally Isuzu sells new Isuzu motor vehicles at its dealership in Bedford, Ohio. On March 4, 1999, appellee, American Isuzu Motors, Inc. ("Isuzu"), notified Lally that it intended to approve a proposed sale of Southwest Isuzu Truck ("Southwest") to Sorbir Inc. dba Marshall Ford ("Marshall Ford"). Marshall Ford's dealership is located 9.6 miles from Lally Isuzu. Because the proposed sale involved the relocation of the Southwest franchise to within ten miles of the Lally dealership, Isuzu was required to notify Lally of the proposed relocation, pursuant to R.C.
{¶ 4} On March 17, 1999, pursuant to R.C.
{¶ 5} Southwest and Marshall Ford did not finalize their buy-sell agreement, and Southwest ceased doing business. On April 15, 1999, Isuzu notified Southwest that it was terminating Southwest's Isuzu franchise. On May 3, 1999, Isuzu notified Lally's counsel, via facsimile, of its termination of Southwest's Isuzu franchise. In a letter dated May 4, 1999, and filed with OMVDB on May 12, 1999, Isuzu notified OMVDB of its termination of the Southwest franchise. Thus, as of May 1999, both Lally and OMVDB were aware that the relocation of the Southwest Isuzu franchise was not going to materialize. Since then, the sole issue in dispute has been Lally's entitlement to recover attorney fees.
{¶ 6} The hearing examiner assigned to Lally's protest held a pre-hearing conference on August 12, 1999, and filed an entry on September 1, 1999, noting Isuzu's withdrawal of the proposed relocation and Lally's insistence that it retained standing to proceed. The hearing examiner granted Isuzu leave to file a motion to dismiss on or before October 1, 1999, and established deadlines for opposing and reply memoranda.
{¶ 7} On October 1, 1999, Isuzu filed a motion to dismiss Lally's protest because Isuzu was no longer contemplating the proposed relocation. Lally opposed Isuzu's motion, arguing that issues relating to Lally's entitlement to attorney fees were not moot. However, Lally did not object to dismissal as long as the hearing examiner found no good cause for the previously proposed relocation and awarded Lally attorney fees. Without expressly addressing Lally's request for attorney fees, the hearing examiner concluded that, because Isuzu was not relocating a new dealership in Lally's relevant market area, all issues in Lally's protest were moot, and he recommended dismissal of the protest.
{¶ 8} Lally filed an objection to the hearing examiner's recommendation, arguing that, pursuant to Slavin Ford, Inc. v.Ford Motor Co. (Aug. 1, 1991), Franklin App. No. 91AP-354, issues regarding Lally's entitlement to attorney fees were not moot. Lally argued that, absent a stipulation that Isuzu lacked good cause for relocating Southwest's franchise, a hearing was required to determine whether Isuzu had good cause for issuing its notice of relocation. On March 14, 2000, pursuant to the automatic approval provision of R.C.
{¶ 9} On March 7, 2000, before OMVDB approved the hearing examiner's recommendation, Lally filed a motion to remand for a determination of attorney fees. The hearing examiner scheduled a hearing on Lally's request for attorney fees for April 7, 2000, but subsequently continued the hearing to permit discovery. On April 5, 2000, Lally submitted a notice and application for attorney fees to the hearing examiner, accompanied by an affidavit of Lally's counsel, Christopher M. DeVito.
{¶ 10} On April 13, 2000, with the issue of attorney fees pending before the hearing examiner, Lally filed a notice of appeal, pursuant to R.C.
{¶ 11} Despite Lally's appeal, proceedings on the issue of attorney fees continued before the hearing examiner. In an entry filed April 27, 2000, the hearing examiner ordered completion of discovery on or before May 26, 2000, in preparation for a hearing to be scheduled in June 2000. A May 8, 2000 entry noted Lally's pending appeal and the lack of an objection from Isuzu to proceed with a hearing regarding attorney fees. The hearing examiner ordered Lally's counsel to submit bills and expenses, along with a memorandum regarding any entry or expense supporting Lally's pending request for a protective order. On May 11, 2000, the hearing examiner scheduled a hearing for June 21, 2000.
{¶ 12} On May 22, 2000, Isuzu filed a motion to dismiss Lally's application for attorney fees, to which Lally filed a memorandum contra on May 30, 2000. The parties filed supplemental memoranda in support of their respective positions on June 19 and June 21, 2000. On June 20, 2000, the hearing examiner vacated the June 21, 2000 hearing date, ordered the record closed on June 21, 2000, and stated that the matter would be submitted for decision. The record reveals no further action by the hearing examiner until this matter was remanded to OMVDB after Lally's first appeals to the Franklin County Court of Common Pleas and this court.
{¶ 13} In its first appeal to the Franklin County Court of Common Pleas, Lally argued that, pursuant to R.C.
{¶ 14} Lally appealed to this court in Lally v. Ohio MotorVehicle Dealers Bd. (Dec. 18, 2001), Franklin App. No. 01AP-676 ("Lally I"). In two assignments of error, Lally asserted that: (1) OMVDB's finding of mootness contradicted R.C.
{¶ 15} On remand to OMVDB, a February 14, 2002 entry provided that the first issue to be determined was whether attorney fees were appropriate and established a schedule for briefing that issue. The hearing examiner issued his recommendation on December 12, 2002, determining, as a matter of law, that Lally was not entitled to an award of attorney fees because there had been no finding by OMVDB in favor of Lally. The hearing examiner also incorporated his prior recommendation that Lally's protest was moot. On December 23, 2002, Lally filed objections to the hearing examiner's recommendation. On January 16, 2003, OMVDB approved the hearing examiner's recommendation, pursuant to R.C.
{¶ 16} On September 27, 2005, the trial court affirmed the OMVDB decision. The trial court distinguished Slavin Ford and concluded that OMVDB did not "[find] in favor of" Lally as required to warrant an award of fees under R.C.
{¶ 17} Here, in its second appeal to this court, Lally asserts two assignments of error for our consideration:
I. The Common Pleas Court erred as a matter of law by concluding that the Ohio Motor Vehicle Dealers Board Protest was not resolved in Lally's (franchisee) favor after Isuzu (manufacturer) unilaterally withdrew from a pending protest proceeding.
II. Ohio's Public Policy requires the reimbursement of a franchisee's attorney fees when a manufacturer unilaterally withdraws from a pending protest proceeding, thereby failing to establish the manufacturer's "good cause" burden of proof and resulting in the franchisee becoming the prevailing party as a matter of law.
{¶ 18} In an appeal from an administrative agency, pursuant to R.C.
{¶ 19} The standard of review for a court of appeals in an administrative appeal is more limited than that of the court of common pleas. The court of appeals' review is limited to determining whether the court of common pleas abused its discretion. Scheidler v. Ohio Bur. of Workers' Comp., Franklin App. No. 04AP-584,
{¶ 20} By its first assignment of error, Lally argues that the trial court erred by concluding that the protest action was not resolved in Lally's favor when Isuzu unilaterally withdrew from the protest. Lally asserts:
* * * [A]s a matter of law, an automobile dealer who files an administrative protest, pursuant to R.C. §
In essence, Lally contends that OMVDB's denial of Lally's application for attorney fees and the trial court's affirmance of that order are not in accordance with law because, as a matter of law, Lally was entitled to attorney fees based on Isuzu's withdrawal of its notice of relocation.
{¶ 21} R.C.
(C) The franchisor shall be liable to the franchisee or prospective transferee for reasonable attorney fees, witness fees, and any other costs incurred by the franchisee or prospective transferee in any protest filed under section
For purposes of R.C. Chapter 4517, Isuzu is a "franchisor" and Lally a "franchisee." See R.C.
{¶ 22} R.C.
{¶ 23} Throughout this proceeding, Isuzu has maintained that Lally is not entitled to recover attorney fees because OMVDB did not find in favor of Lally. After reviewing the record, the trial court correctly concluded that there has been no express finding by OMVDB in favor of Lally. OMVDB approved the hearing examiner's initial determination that Lally's protest was moot upon Isuzu's withdrawal of its notice of relocation. Accordingly, over Lally's objection, OMVDB granted Isuzu's motion to dismiss. Upon remand for a determination of Lally's entitlement to attorney fees, OMVDB approved the hearing examiner's recommendation, denying Lally's application for attorney fees because there had been no finding in Lally's favor. Thus, the record contains no finding by OMVDB in favor of Lally.
{¶ 24} Despite the absence of any express finding in its favor by OMVDB, Lally argues that Isuzu's withdrawal of its notice of relocation while Lally's protest was pending entitled Lally to attorney fees as a matter of law. Lally's present argument differs from its original argument to the hearing examiner and OMVDB. In its memorandum in opposition to Isuzu's initial motion to dismiss, Lally argued that a hearing was required to determine whether good cause existed when Isuzu issued its notice of relocation. Similarly, in its objection to the hearing examiner's recommendation of dismissal, Lally argued that, "[u]nless [Isuzu] stipulates that there was not good cause, discovery must proceed and a hearing must be held to determine whether or not there was good cause." Presently, Lally argues that R.C.
{¶ 25} We reject Lally's argument that it is entitled to attorney fees as the "prevailing party" despite the absence of an OMVDB finding in Lally's favor. Although Lally cites several cases as authority for its proposition that Ohio courts may award attorney fees to a "prevailing party," none of those cases involves the application of R.C.
{¶ 26} Lally next argues that Slavin Ford supports its argument that a protesting franchisee is entitled to reimbursement of its attorney fees when the franchisor unilaterally withdraws from a pending protest. Slavin Ford does not stand for the sweeping proposition Lally advocates.
{¶ 27} In Slavin Ford, Ford Motor Company ("Ford") issued a notice of termination of dealership to Slavin Ford, Inc. ("Slavin"), pursuant to R.C.
{¶ 28} Slavin's protest remained pending for over two years without a hearing, after which time Ford withdrew its notice of termination and moved for dismissal. The hearing examiner recommended that OMVDB grant Ford's motion to dismiss and deny Slavin's request for attorney fees. OMVDB rejected the hearing examiner's recommendation and remanded the matter to the hearing examiner for a hearing on the merits. Ford appealed OMVDB's rejection of the hearing examiner's recommendation to the Franklin County Court of Common Pleas, which reversed, effectively granting Ford's motion to dismiss the protest action. Slavin then appealed to this court.
{¶ 29} Because it was dispositive of the appeal, this court first addressed Slavin's second assignment of error, in which Slavin argued that OMVDB's order, remanding the protest action for a hearing on the merits, was not a final appealable order. Consistent with our holdings that denial of a motion to dismiss does not generally constitute a final appealable order, we concluded that OMVDB's order was interlocutory and that further proceedings were required before an appealable order would issue. See Taylor v. Ohio State Univ. (May 11, 1995), Franklin App. No. 94API11-1639. Based on the absence of a final appealable order from OMVDB, we determined that the court of common pleas lacked jurisdiction to consider Ford's appeal. For that reason, we remanded the matter to the common pleas court with instructions to dismiss.
{¶ 30} After concluding that the trial court lacked jurisdiction to consider Ford's appeal, this court nevertheless went on to address Slavin's argument that the trial court erred by concluding that mootness precluded a hearing on the merits, as ordered by OMVDB. Slavin argued that Ford's withdrawal of its termination notice did not moot the protest action because the question of whether Ford had good cause to terminate Slavin's franchise at the time it issued the termination notice remained unsettled. Thus, Slavin contended that its entitlement to attorney fees, based on the presence or absence of good cause, was likewise unresolved. In response, Ford argued that OMVDB lacked jurisdiction over Slavin's protest, including jurisdiction to award attorney fees, once Ford withdrew its notice of termination.
{¶ 31} Upon review, we stated:
We agree with Slavin that these issues are not moot. Statutory law clearly entitles a franchisee protesting a notice of termination to attorney fees in any protest in which the OMVDB finds in the franchisee's favor. R.C.
Thus, because an award of attorney fees relies upon the determination of whether there was good cause to terminate the dealership, the attorney fee issue is not moot. Finally, Ford's withdrawal of its notice of termination did not deprive OMVDB of jurisdiction since it was Slavin which had invoked jurisdiction by filing the protest. A question of fact remains as to Ford's good cause for termination at the time the notice of termination was filed.
Slavin Ford. Thus, this court opined that OMVDB retained jurisdiction to determine whether Ford had good cause for issuing its notice of termination and that the issue of good cause was not moot.
{¶ 32} Contrary to Lally's argument, Slavin Ford does not entitle a protesting franchisee to recover attorney fees based simply on a franchisor's withdrawal of the notice on which the pending protest is based. In fact, Slavin did not argue for such a rule. Under Lally's theory, Slavin would have been entitled to attorney fees as a matter of law. This court did not determine that Slavin was entitled to attorney fees but, rather, stated only that a question of fact remained as to Ford's good cause for terminating Slavin's franchise at the time it issued its notice of termination. Thus, Slavin Ford provides only that a franchisor's withdrawal of a notice of termination during a pending protest does not deprive OMVDB of jurisdiction to determine if the franchisor had good cause to terminate when it issued its notice, as required by R.C.
{¶ 33} Here, Isuzu argues, and the trial court agreed, thatSlavin Ford is inapplicable because it involved a protest under R.C.
{¶ 34} Lally filed its protest, pursuant to R.C.
* * * [W]hen a franchisor seeks to * * * relocate an existing new motor vehicle dealer at a location in, a relevant market area where the same line-make of motor vehicle is then represented, the franchisor shall first give notice in writing, by certified mail, to the motor vehicle dealers board and to each franchisee of such line-make in the relevant market area of the franchisor's intention to * * * relocate an existing new motor vehicle dealer at a location in, that relevant market area. * * * Within fifteen days after receiving the notice, or within fifteen days after the conclusion of any appeal procedure provided by the franchisor, whichever is later, the franchisee of the same line-make may file with the board a protest against the * * * relocation of the proposed new motor vehicle dealer. * * *
R.C.
{¶ 35} In Slavin Ford, Slavin filed its protest pursuant to R.C.
{¶ 36} R.C.
{¶ 37} Despite the lack of an express requirement in R.C.
{¶ 38} There is no dispute that Isuzu was required to review the proposed buy-sell agreement pursuant to R.C.
{¶ 39} On May 3, 2006, this court granted Lally leave to submit, as supplemental authority, Halpert Properties, Inc. v.DaimlerChrysler Motors Co., OMVDB case No. 05-01-MVDB-302-J. Lally argues that Halpert supports Lally's arguments that good cause is a mandatory requirement under R.C. Chapter 4517 and that a manufacturer cannot moot the requirement of good cause.
{¶ 40} In Halpert, DaimlerChrysler Motors Co. ("DaimlerChrysler") refused to approve the transfer of Lake County Chrysler, Inc. ("Lake County Chrysler") to Halpert Properties, Inc. ("Halpert"), consummation of which was conditioned on DaimlerChrysler's approval of Halpert as its area Chrysler dealer. Instead, DaimlerChrysler exercised its right of first refusal under the DaimlerChrysler Sales and Service Agreement, in essence substituting another buyer, Murmike Dodge, Inc. dba Village Dodge ("Village Dodge"), for Halpert. Pursuant to R.C.
{¶ 41} Halpert and DaimlerChrysler entered into a stipulation, limiting the issues in Halpert's protest to whether DaimlerChrysler was required to comply with R.C.
{¶ 42} As the Halpert hearing examiner concluded, the requirements of R.C. Chapter 4517 are mandatory, even in the face of conflicting contract terms. See Nissan Motor Corp., U.S.A. v.Dever (Mar. 28, 2000), Franklin App. No. 99AP-596. However, Isuzu neither relies on contract terms contrary to the requirements of R.C. Chapter 4517 nor otherwise disputes that it was subject to the requirements of R.C. Chapter 4517. Rather, Isuzu argues that R.C.
{¶ 43} Halpert filed its protest, pursuant to R.C.
{¶ 44} In Halpert, DaimlerChrysler also argued that it was not required to comply with R.C.
{¶ 45} Isuzu's position here contrasts sharply with that of DaimlerChrysler in Halpert. Isuzu took no action to preclude review of its proposed relocation or to foreclose the result Lally sought through its protest. To the contrary, Isuzu quickly notified Lally that the proposed relocation was not going to occur, based on the failure of Southwest and Marshall Ford to finalize their buy-sell agreement. On the other hand, inHalpert, DaimlerChrysler took action directly contrary to Halpert and argued that its unilateral action stripped Halpert of any right to protest DaimlerChrysler's refusal to approve the transfer, despite the mandatory requirements of R.C.
{¶ 46} For the foregoing reasons, we conclude that neither R.C.
{¶ 47} By its second assignment of error, Lally argues that Ohio public policy "requires the reimbursement of a franchisee's attorney fees when a manufacturer unilaterally withdraws from a pending protest proceeding, thereby failing to establish the manufacturer's `good cause' burden of proof and resulting in the franchisee becoming the prevailing party as a matter of law." The trial court rejected Lally's public policy argument and, to the contrary, found that public policy weighed against awarding Lally its attorney fees.
{¶ 48} Lally asserts that the attorney fees provision of R.C.
{¶ 49} However, we do not agree that Ohio public policy requires the imposition of attorney fees, as a matter of law, in favor of a protesting franchisee simply because the franchisor withdraws the notice upon which the franchisee based its protest. In Earl Evans Chevrolet at 276, quoting Car Business Inc. v.Fleetwood Motor Homes of Indiana, Inc. (1985),
{¶ 50} Both Slavin Ford and Halpert presented more compelling scenarios for an attorney fees rule based on public policy than this case. In Slavin Ford, where Slavin's protest remained pending for two years and Slavin eventually went out of business before Ford withdrew its notice of termination, this court did not hold that Slavin was entitled to attorney fees as a matter of law. More disturbingly, in Halpert, DaimlerChrysler, by its unilateral action, attempted to deny Halpert any recourse from DaimlerChrysler's refusal to approve a transfer to Halpert. There, the hearing examiner awarded attorney fees, not because of DaimlerChrysler's unilateral action to moot the protest, but because DaimlerChrysler stipulated that it lacked good cause for refusing to approve the transfer. Just as public policy did not require an award of attorney fees in favor of the protesting parties in Slavin Ford or Halpert, public policy does not mandate an award of attorney fees here. Accordingly, we reject Lally's argument that Ohio public policy requires the reimbursement of a protesting franchisee's attorney fees, as a matter of law, when the franchisor withdraws the notice upon which a pending protest was based. Thus, we overrule appellants' second assignment of error.
{¶ 51} For the foregoing reasons, we conclude that OMVDB's order was in accordance with law and that the trial court did not abuse its discretion in affirming OMVDB's order denying Lally's request for attorney fees. Thus, we overrule appellants' assignments of error and affirm the judgment of the Franklin County Court of Common Pleas.
Judgment affirmed.
Petree and Sadler, JJ., concur.
Case-law data current through December 31, 2025. Source: CourtListener bulk data.