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    General GMC, Inc. v. Volvo White Truck Corp., 918 F.2d 306, 1st Cir. (1990)

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    This document summarizes a court case between General GMC truck dealership and Volvo White Truck Corp. and Volvo GM Heavy Truck Corp. General GMC sued the defendants for violating federal and state dealer protection laws and for breach of contract when their dealership was terminated. The district court granted summary judgment to the defendants. The appellate court affirmed on the federal law claim but reversed on the state law and breach of contract claims, finding factual issues remained. Specifically, depositions raised questions as to whether General GMC was actually considered as a dealership by the new joint venture.

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    General GMC, Inc. v. Volvo White Truck Corp., 918 F.2d 306, 1st Cir. (1990)

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    Scribd Government Docs
    68 views5 pages
    This document summarizes a court case between General GMC truck dealership and Volvo White Truck Corp. and Volvo GM Heavy Truck Corp. General GMC sued the defendants for violating federal and state dealer protection laws and for breach of contract when their dealership was terminated. The district court granted summary judgment to the defendants. The appellate court affirmed on the federal law claim but reversed on the state law and breach of contract claims, finding factual issues remained. Specifically, depositions raised questions as to whether General GMC was actually considered as a dealership by the new joint venture.

    Original Description:

    Filed: 1990-11-09 Precedential Status: Precedential Citations: 918 F.2d 306 Docket: 90-1414

    Original Title

    General Gmc, Inc. v. Volvo White Truck Corp., 918 F.2d 306, 1st Cir. (1990)

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    This document summarizes a court case between General GMC truck dealership and Volvo White Truck Corp. and Volvo GM Heavy Truck Corp. General GMC sued the defendants for violating federal and state dealer protection laws and for breach of contract when their dealership was terminated. The district court granted summary judgment to the defendants. The appellate court affirmed on the federal law claim but reversed on the state law and breach of contract claims, finding factual issues remained. Specifically, depositions raised questions as to whether General GMC was actually considered as a dealership by the new joint venture.

    Copyright:

    Public Domain
    Download as PDF or read online from Scribd
    Download as pdf
    68 views5 pages

    General GMC, Inc. v. Volvo White Truck Corp., 918 F.2d 306, 1st Cir. (1990)

    Uploaded by

    Scribd Government Docs
    This document summarizes a court case between General GMC truck dealership and Volvo White Truck Corp. and Volvo GM Heavy Truck Corp. General GMC sued the defendants for violating federal and state dealer protection laws and for breach of contract when their dealership was terminated. The district court granted summary judgment to the defendants. The appellate court affirmed on the federal law claim but reversed on the state law and breach of contract claims, finding factual issues remained. Specifically, depositions raised questions as to whether General GMC was actually considered as a dealership by the new joint venture.

    Copyright:

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    of 5

    918 F.

    2d 306

    GENERAL GMC, INC., Plaintiff, Appellant,


    v.
    VOLVO WHITE TRUCK CORP., et al., Defendants,
    Appellees.
    No. 90-1414.

    United States Court of Appeals,


    First Circuit.
    Heard Sept. 14, 1990.
    Decided Nov. 9, 1990.

    Mary P. Harrington, with whom George W. Atkins, III, Debra R.


    Silberstein and Ronan, Segal & Harrington, were on brief, for plaintiff,
    appellant.
    Mark E. Tully, with whom Anthony M. Feeherry and Goodwin, Procter &
    Hoar, were on brief, for defendants, appellees.
    Before TORRUELLA, Circuit Judge, BOWNES, Senior Circuit Judge,
    and CYR, Circuit Judge.
    TORRUELLA, Circuit Judge.

    Plaintiff-appellant General GMC, Inc., ("General GMC") sued defendantsappellees Volvo White Truck Corp. ("Volvo White") and Volvo GM Heavy
    Truck Corp. ("Joint Venture") in the United States District Court for the
    District of Massachusetts. Appellees sought and were granted summary
    judgment on three counts: (1) violation of the Automobile Dealers' Day in
    Court Act, 15 U.S.C. Secs. 1221-1225 ("ADDCA"), (2) violation of
    Mass.Gen.L. ch. 93B, and (3) breach of contract. General GMC appeals that
    order. For the reasons stated below, we affirm in part and reverse in part.

    FACTS
    2

    Appellant General GMC is a truck dealership located in Methuen,


    Massachusetts. General GMC was offered a Volvo franchise in 1975 and

    operated under a written franchise agreement with appellee Volvo White until
    December 31, 1984, when the agreement expired by its own terms. Volvo
    White extended the agreement, in writing, through September 30, 1985. After
    that time, General GMC and Volvo White conducted business without a written
    agreement.
    3

    The principal owner of the dealership was Mr. Edward Perrault, until his death
    in 1984. Upon Mr. Perrault's death, his widow, Mrs. Christine Perrault, became
    sole shareholder. Mrs. Perrault notified Volvo White of her intent to sell the
    business to Mr. Timothy Rock, who had been an employee since 1959 and
    general manager since 1976. Volvo White, however, refused to consent to the
    sale because Mr. Rock was seeking financing from Motors Holding Corp., a
    division of General Motors and a competitor of Volvo. Nevertheless, Mr. Rock
    purchased the dealership on March 13, 1987, and continued to do business with
    Volvo White until December 31, 1987. Mr. Rock did not finance his purchase
    through Motors Holding Corp.; however, Volvo White never consented to the
    sale.

    In 1986, Volvo White decided that it could not survive in the heavy truck
    market alone and began negotiating with General Motors to form a joint
    venture. The Joint Venture, known as Volvo GM Heavy Truck Corp., was
    officially formed on December 31, 1986, and began doing business on January
    1, 1988. Volvo White ceased operating as a separate entity at that time.

    The Joint Venture decided as a matter of economics that it could support only
    240 dealerships across the United States. This required a reduction, by
    approximately half, of the dealerships currently in operation. Two dealerships
    in the Methuen, Massachusetts area operated as Volvo franchises: General
    GMC and The Bracken Co. ("Bracken"). The Joint Venture determined that its
    objective could best be achieved if that number was reduced to only one. The
    Joint Venture chose Bracken over General GMC and General GMC's franchise
    was terminated as of December 31, 1987. It is that choice which is the subject
    of this dispute.

    STANDARD OF REVIEW
    6

    Summary judgment should only be issued if there is no dispute of material fact


    and the moving party is entitled to judgment as a matter of law. See
    Fed.R.Civ.P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct.
    2548, 2552-53, 91 L.Ed.2d 265 (1986). The court must review the record,
    together with all reasonable inferences therefrom, in the light most favorable to
    the non-moving party. Johnson v. Educational Testing Service, 754 F.2d 20, 25

    (1st Cir.), cert. denied, 472 U.S. 1029, 105 S.Ct. 3504, 87 L.Ed.2d 635 (1985).
    DISCUSSION
    7

    General GMC claims that neither the Joint Venture nor Volvo White acting for
    the Joint Venture made a fair evaluation before choosing Bracken as the sole
    Joint Venture dealership for the Methuen area and therefore appellees acted in
    bad faith in violation of federal statute (the ADDCA), in violation of state
    statute (Chapter 93B) and in breach of contract. In moving for summary
    judgment, Volvo White presented evidence to prove that the decision to
    terminate General GMC's franchise was made for valid business reasons. The
    district court accepted appellees' contentions and found, as a matter of law, that
    General GMC had no claim. This court finds, with respect to the state law and
    breach of contract claims, that the district court was in error and that there exist
    unresolved issues of material fact. The ruling regarding the federal law claim is
    affirmed as a matter of law.
    1. The ADDCA

    The district court correctly found that in order to prove a violation of the
    ADDCA, General GMC needed to show some evidence of coercion or
    intimidation. Section 1222 of the ADDCA allows an automobile dealer to bring
    suit

    9
    against
    an[ ] automobile manufacturer ... [to recover damages sustained] by reason
    of the failure of said ... manufacturer ... to act in good faith in performing or
    complying with any of the terms or provisions of the franchise, or in terminating,
    cancelling, or not renewing the franchise with said dealer; Provided, That in any
    such suit the manufacturer shall not be barred from asserting in defense of any such
    action the failure of the dealer to act in good faith.
    10

    15 U.S.C. Sec. 1222. The statute defines "good faith" as

    11 duty ... to act in a fair and equitable manner toward each other so as to guarantee
    the
    the one party freedom from coercion, intimidation, or threats of coercion or
    intimidation from the other party: Provided, That recommendation, endorsement,
    exposition, persuasion, urging or argument shall not be deemed to constitute lack of
    good faith.
    12

    Id. at Sec. 1221(e). This court has read the requirements of the ADDCA very
    narrowly to require "actual or threatened coercion or intimidation." H.D. Corp.
    of Puerto Rico v. Ford Motor Co., 791 F.2d 987, 990 (1st Cir.1986). Since

    General GMC has produced no evidence showing that it was subjected to


    coercion or intimidation by either Volvo White or the Joint Venture, appellees
    were properly granted summary judgment on this issue.
    2. Chapter 93B
    13

    Chapter 93B of the Massachusetts General Laws is the state law counterpart of
    the ADDCA. Section 4(1) states that

    14 shall be deemed a violation of [this chapter] for any manufacturer ... to engage in
    [i]t
    any action which is arbitrary, in bad faith, or unconscionable and which causes
    damage to any of said parties or to the public.
    15

    Mass.Gen.L. ch. 93B, Sec. 4(1). Furthermore, Sec. 4(3)(e) states that

    16 shall be deemed a violation of [this chapter] ... notwithstanding any term or


    [i]t
    provision of a franchise or selling agreement, to cancel or terminate the franchise or
    selling agreement of a motor vehicle dealer without good cause and without giving
    notice as hereinafter provided ...
    17

    Id. at Sec. 4(3)(e). Notice must be provided within 60 days prior to termination
    and such notice must contain a detailed statement of the reasons for
    termination. Id. at Sec. 4(3)(e)(1). This applies to both written and oral
    agreements. Id. at Sec. 8. The adequacy of notice is not disputed in this appeal.

    18

    Unlike the ADDCA, however, Chapter 93B does not define "bad faith" or
    "good cause." Thus a court, in determining "bad faith" under Chapter 93B, is
    not bound by the same restrictions as under the ADDCA. Bad faith may
    encompass broader conduct under Chapter 93B than mere coercion or
    intimidation. Tober Motors, Inc. v. Reiter Oldsmobile, Inc., 376 Mass. 313,
    319-20, 381 N.E.2d 908 (1978).

    19

    Appellees contended, and the district court accepted, that they acted for good
    cause, and not in bad faith, because they conducted an evaluation of all of their
    dealerships and chose Bracken over General GMC for valid business reasons.
    Appellant argues, and the record shows, however, that appellees' contention
    may not be supported by the evidence. There is sufficient evidence in the
    record, contained in the depositions of Wendover P. Holzworth and Robert
    Pierce McComas, to raise a question of fact as to whether General GMC was
    actually considered for a Joint Venture dealership, and if not, whether failure to
    do so constituted bad faith or lack of good cause under the statute. Mr.

    Holzworth was instrumental in choosing which dealerships would operate for


    the Joint Venture. Mr. McComas supplied sales performance information for
    Volvo White to the Joint Venture evaluators. When questioned, Mr. Holzworth
    stated that he did not know who, if anyone, reviewed General GMC's financial
    statements and in fact could not recall having received a financial statement for
    General GMC. Mr. McComas testified that he had not provided any sales
    information regarding General GMC and was told by Mr. Holzworth in 1987
    that General GMC was not being considered as a potential Joint Venture
    dealership because of General GMC's non-contractual relationship. These
    depositions raises a question of material fact which makes summary judgment
    inappropriate.
    3. Breach of Contract
    20

    The district court dismissed appellant's breach of contract claim for two
    reasons: (a) no contract existed between the parties and (b) Volvo White had
    ceased to exist. The district court erred in dismissing this claim based on the
    alleged nonexistence of a contract without first exploring the possibility of an
    implied contract under applicable law. There is sufficient evidence on the
    record to show that an implied contract may have been developed through the
    parties' course of dealing. Courts have found that franchise agreements are
    protected by some of the general provisions afforded by the Uniform
    Commercial Code. See Zaptha v. Dairy Mart, Inc., 381 Mass. 284, 408 N.E.2d
    1370 (1980) (applying the U.C.C. requirement of good faith between merchants
    to a franchise agreement). Moreover, the fact that Volvo White no longer exists
    as a separate entity does not necessarily imply that the corporation no longer
    exists for purposes of responsibility for damages or otherwise. See Revised
    Model Business Corporation Act Secs. 14.05-14.07 (1984).

    CONCLUSION
    21

    For the reasons stated above, we affirm summary judgment with respect to the
    federal statutory claim and reverse with respect to the state statutory and breach
    of contract claims. Because there no longer exists a question of federal law
    pending before the district court, on remand the court may wish to reconsider
    whether it should continue to exercise jurisdiction over the pendent state
    claims. See United Mine Workers of America v. Gibbs, 383 U.S. 715, 86 S.Ct.
    1130, 16 L.Ed.2d 218 (1966).

    22

    Affirmed in part, reversed and remanded in part.

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