Summary judgment for heavy-duty truck manufacturer granted by United States District Court for the Southern District of New York, John F. Keenan, Judge, on claim by dealer that manufacturer breached contract and violated N.Y. Franchised Motor Vehicle Dealer Act, N.Y. Veh. & Traf. Law §§ § 460-471 (McKinney 1986), reversed.
Oakes, Miner, and Altimari, Circuit Judges.
This diversity suit was brought by a truck dealer against its franchisor for breach of contract and an alleged violation of the New York Franchised Motor Vehicle Dealer Act, N.Y. Veh. & Traf. Law §§ 460-471 (McKinney 1986).
The United States District Court for the Southern District of New York, John F. Keenan, Judge, considered the truck dealer's motion for a preliminary injunction, with affidavits submitted for and against the injunction. Finding a failure to establish irreparable injury and also that the dealer had failed to raise sufficiently serious questions going to the merits to make them a fair ground for litigation, the court denied the motion. The court then treated the franchisor's motion to dismiss under Fed. R. Civ. P. 12(b)(6) as one for summary judgment under Fed. R. Civ. P. 56 and granted summary judgment. We reverse the summary judgment and remand.
Arthur Glick Truck Sales, Inc. ("Glick") is a General Motors Corporation ("GMC") truck dealer in Sullivan County, New York, which sells three distinct types of trucks -- light-duty, medium-duty, and heavy-duty trucks -- under GMC franchise(s). Whether the franchise is singular or plural depends upon the merits of the case. Glick also has or had franchises from Kenworth and Mercedes-Benz for heavy-duty trucks. Glick has held GMC franchises for some time and received them most recently under a Dealer Sales and Service Agreement on November 1, 1985. Under the Agreement, General Motors grants Glick a right to buy new GMC truck motor vehicles "identified in the Motor Vehicle Addendum hereto" and to identify itself as an authorized GMC truck dealer. The dealer agrees to sell and service GMC trucks and to build and maintain consumer confidence and to establish and maintain satisfactory premises. While the Agreement refers to the "Motor Vehicle Addendum" in the singular, there are four separate addenda attached to the Agreement, one covering light-duty trucks and school buses; two covering medium-duty trucks of different models; and the fourth covering heavy-duty trucks, including the J8000 and J9500 Brigadier models, the N9500 General models, and the D9500 Astro models.
The heavy-duty truck Addendum states that it shall "remain in effect unless cancelled or until superseded by a new Motor Vehicle Addendum furnished Dealer by GMC Truck." It is signed by GMC Truck Operation and dated November 7, 1986. There are provisions in the Dealer Sales and Service Agreement by which General Motors reserves the right to "change the Motor Vehicle Addendum by furnishing Dealer a superseding Motor Vehicle Addendum" (Article 1.1.1) as well as the right to "discontinue any Product at any time and its only obligation shall be to manufacture and deliver to Dealer accepted orders which Dealer does not elect to cancel." (Article 1.5.) The termination provisions (Article 4) permit termination of the Agreement by the dealer by written notice to General Motors; termination by agreement of both; termination by either in the event the other fails to secure or maintain any necessary license required for the performance of the agreement; and termination by General Motors for failures on the dealer's part, such as incapacity, failure of performance, attempted sale or transfer of the dealership, refusal to furnish sales and service or financial information, engaging in unfair or deceptive business practices, insolvency, and the like.
On September 10, 1986, GMC Truck Corporation wrote to all of its dealers, including Glick, concerning a proposed joint venture between Volvo White and General Motors. The letter stated that not every GMC truck dealer would be selected to be a part of the new joint venture, but it encouraged every dealer to work hard and continue to give sales and service to the large GMC truck owner base. Dealers' sales and service performance would be among the criteria used by the joint venture to select its dealers.
GMC Truck Corporation then wrote to Arthur Glick Truck Sales on December 23, 1986, announcing that an agreement to form the joint venture had been signed and that Volvo GM Heavy Truck Corp. would be formed as of January 1, 1987. The result would be that GMC Truck "will cease offering heavy duty truck products for sale in North America on December 31, 1987" and "the GMC Truck Operation Motor Vehicle Addendum to General Motors Corporation Dealer Sales and Service Agreement for new Heavy Duty Truck Motor Vehicles will expire as of December 31, 1987." The letter added that the remaining Motor Vehicle Addenda and the Dealer Sales and Service Agreement would not be affected. Thus, a dealer such as Arthur Glick, with addenda covering light-duty trucks, medium-duty trucks, and heavy-duty trucks, could continue to act as a dealer for the light- and medium-duty trucks, even after the "expiration" of the heavy-duty truck addendum.
On July 6, 1987, Volvo GM Heavy Truck Corporation notified Glick that it would not offer Glick a dealership for the heavy-duty trucks to be manufactured and distributed by it after January 1, 1988.
GMC Truck Corporation sent Glick a similar letter the same day, informing the dealer that it would not be offered a dealership for the joint venture. The letter also stated that GMC would offer Glick the same assistance provided under the Dealer Sales and Service Agreement for terminations, namely buying back new, unused, and unsold Brigadiers, Generals, and Astros, repurchasing signs, tools, parts, and accessories, and the like. Accompanying the letter was an "ACCEPTANCE OF BENEFITS AND RELEASE OF RELATED CLAIMS" to be signed by the dealer wishing to avail itself of the termination assistance; this attachment, if signed, would release General Motors from any and all claims related to the cancellation of the heavy-duty addendum.
Glick did not execute the acceptance of benefits and release. Instead, Glick sued GMC December 18, 1987, alleging, inter alia, that General Motors was continuing to manufacture its Brigadier heavy-duty truck and market it through the joint venture under the trade name "White GMC." One of the affidavits submitted in support of Glick's motion for a preliminary injunction included an excerpt from Automotive News for January 25, 1988, quoting General Motors officials as saying that Brigadier sales in 1987, amounting to 52,227 units, accounted for 71.52% of General Motors' Class 8, i.e., heavy-duty, truck sales. Glick also submitted an extract from the testimony of General Motors' Director of International Strategy Development, Truck and Bus Group, stating that the Brigadier had been very successful and achieved more than a 30% share of its segment of the heavy-duty truck market.
Arthur Glick's affidavit accompanying the request for a preliminary injunction indicated that his company had been a retail dealer of General Motors trucks since 1968 and in 1986 had high performance ratings, and that the sale of heavy-duty trucks and associated revenue from financing and used truck trade-ins contribute significantly to the company's revenues, such parts and service representing over half of Glick's parts and service revenue. Todd Glick stated in his affidavit that for ten months in 1987 approximately 24% of Glick's gross profits came from selling and servicing General Motors heavy-duty trucks. Another affidavit pointed out that General Motors continues to manufacture the Brigadier at its Pontiac, Michigan, plant in response to orders from the joint venture and plans to do so until at least January 1, 1989.
The district court, in its summary judgment decision against Glick, held that no "franchise" had been terminated, despite the fact that the statute defines a franchise as "a written arrangement for a definite or indefinite period in which a manufacturer or distributor grants to a franchised motor vehicle dealer a license to use a trade name, service mark or related characteristic." N.Y. Veh. & Traf. Law § 462(6) (McKinney 1986). Rather, said the district court, "what took place here was that a manufacturer opted to discontinue a product line, and put its efforts for that line into a joint venture with another entity." The fact that General Motors owns a share in a separate corporation that now manufactures heavy-duty trucks does not change the result. Since no franchise was terminated, the New York Franchised Motor Vehicle Dealer Act was not violated, and since Article 1.5 of the Dealer Sales Agreement permits discontinuance ...