Ernie Haire Ford Inc. v. Ford Motor Company

Citation260 F.3d 1285
Decision Date08 August 2001
Docket NumberNo. 00-14701,00-14701
Parties(11th Cir. 2001) ERNIE HAIRE FORD, INC., AUTO ASSETS TRUST, MARY K. HAIRE, individually and as trustee of the Ernest B. Haire, Jr., Revocable Trust, ERNEST B. HAIRE, III, Plaintiffs-Appellants, v. FORD MOTOR COMPANY, Defendant-Appellee
CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)

[Copyrighted Material Omitted]

[Copyrighted Material Omitted] Appeal from the United States District Court for the Middle District of Florida.

Before BLACK and BARKETT, Circuit Judges, and TIDWELL*, District Judge.

BLACK, Circuit Judge:

Appellee Ford Motor Company distributes its automobiles through a nationwide network of independently-owned dealerships. Appellants Mary Haire and Ernest B. Haire, III (the Haires) are shareholders of Ernie Haire Ford, Inc. (EHF), an automobile dealership located in Tampa, Florida.1 Appellant Auto Assets Trust (Auto Assets) was to serve as a broker in a proposed transaction. Appellants claim Appellee is liable, under Florida law, for its refusal to approve the proposed transaction. The district court granted summary judgment to Appellee. We affirm.

I. BACKGROUND

We set forth the facts in the light most favorable to Appellants. On March 31, 1985, Appellant EHF and Appellee entered in a Ford Sales and Service Agreement (Dealership Agreement), which was amended on January 5, 1994. On September 5, 1996, EHF and Appellee executed a Dealer's Facility Supplement (Supplement). The Dealership Agreement and the Supplement contain three provisions pertinent to this case.

First, section 5(b) of the Dealership Agreement states that the dealership location is described in the Supplement, which in turn specifies two addresses on North Florida Avenue in Tampa as the location for EHF's dealership. Second, section 5(c) in the Dealership Agreement provides in part:

[EHF] shall not move or substantially modify or change the usage of any of the DEALERSHIP LOCATION or FACILITIES . . . , nor shall [EHF] . . . directly or indirectly establish or operate in whole or in part any other locations or facilities . . . without the prior written consent of [Appellee]. (emphasis added)

Third, section 9(a) in the Dealership Agreement provides:

[Appellee] reserves the right to determine, from time to time, in its best judgment, the numbers, locations and sizes of authorized dealers necessary for proper and satisfactory sales and service representation . . . within and without the DEALER'S LOCALITY. In making such determinations, [Appellee] from time to time conducts, to the extent deemed adequate by [Appellee] and subject to the ready availability of information, studies of the locality, including such factors as geographic characteristics, consumer shopping habits, competitive representation patterns, [etc.] . . . . (emphasis added).

Throughout 1997 and 1998, EHF negotiated a transfer of its dealership to CarMax, a non-party. Under the proposed transaction, the Haires would sell their shares in EHF to Auto Assets, which in turn would sell EHF's operating assets, including the Dealership Agreement, to CarMax. The proposed transaction also called for the relocation of the dealership from North Florida Avenue to CarMax's superstore on Bearss Avenue. The transaction was conditioned on Appellee's approval of both the transfer and relocation of the dealership.

In October 1998, EHF requested Appellee's approval for the proposed transaction, including the transfer of the dealership to CarMax and the relocation to Bearss Avenue. In December 1998, Appellee disapproved the relocation to Bearss Avenue, and because the transfer was conditioned on the relocation, Appellee also disapproved the transfer to CarMax. Contemporaneously, to ensure the transaction would not be consummated, Appellee filed a verified complaint with Department of Highway Safety and Motor Vehicles (DHSMV) pursuant to Fla. Stat. § 320.643; the sole basis for Appellee's verified complaint was its objection to the proposed relocation. Shortly thereafter, CarMax terminated the proposed transaction, and the DHSMV dismissed the verified complaint as moot.

In their lawsuit before the district court, Appellants presented a plethora of evidence about Appellee's motive for rejecting the proposed transaction. For instance, as early as the late 1970s or early 1980s, and then again in late 1995 or early 1996, Appellee had suggested that EHF's dealership be moved to Bearss Avenue. Nevertheless, in early 1998, Appellee tried to persuade Appellants not to transfer the dealership to CarMax, despite admitting that the Bearss Avenue location had several advantages over the North Florida Avenue location. At an August 1998 meeting, Appellee informed CarMax that it would not approve the transaction even if CarMax offered to operate the dealership at the North Florida Avenue location. Prior to rejecting the transaction, Appellee performed a limited amount of due diligence; in particular, Appellee requested far less information from CarMax than it normally requested from other proposed transferees. Additionally, had Appellee adhered to its own relocation manual, nine of the ten factors listed therein favored the Bearss Avenue location.

Appellee presented evidence of several reasons supporting its refusal to approve the relocation and transfer. For example, the proposed relocation conflicted with Appellee's market plan, which encompassed placing a new dealership in a different area of Tampa. Moreover, Appellee did not want to move EHF from the "auto row" on North Florida Avenue, and it believed the Bearss Avenue location was near some undesirable businesses. Additionally, Appellee feared the relocation would generate protest litigation by other dealerships pursuant to Fla. Stat. § 320.642. Lastly, Appellee did not want EHF's new-car dealership co-located with CarMax's used-car superstore.

II. STANDARD OF REVIEW

We review a grant of summary judgment de novo, with all facts and reasonable inferences construed in the light most favorable to the nonmoving party. See, e.g., Harbert Int'l, Inc. v. James, 157 F.3d 1271, 1277 (11th Cir. 1998). This case requires us to examine issues concerning the substantive law of Florida. In rendering a decision based on state substantive law, a federal court must "decide the case the way it appears the state's highest court would." E.g., Royal Ins. Co. of Am. v. Whitaker Contracting Corp., 242 F.3d 1035, 1040 (11th Cir. 2001) (internal quotations and citation omitted). Where the state's highest court has not spoken to an issue, a federal court "must adhere to the decisions of the state's intermediate appellate courts absent some persuasive indication that the state's highest court would decide the issue otherwise." Ins. Co. of N. Am. v. Lexow, 937 F.2d 569, 571 (11th Cir. 1991) (internal quotations omitted).

III. DISCUSSION

Appellants claim Appellee is liable, under Florida law, for (1) a breach of contract, (2) a violation of Fla. Stat. § 320.643 (1997), and (3) tortious interference with contract. We examine each of these contentions.2

A. Breach of Contract

To support their breach of contract claims,3 Appellants make two arguments. First, they argue that Appellee did not use "its best judgment," contrary to section 9(a) of the Dealership Agreement, when it rejected the relocation and the transfer of the dealership. Second, Appellants argue Appellee violated the implied covenant of good faith and fair dealing.

For their first argument, Appellants concede that, under sections 5(b)&(c) of the Dealership Agreement, any relocation of the dealership from its North Florida Avenue location required Appellee's written consent. Appellants nonetheless argue that the "best judgment" clause of section 9(a) modified Appellee's discretion when approving or rejecting a proposed relocation. To comply with "best judgment" clause, Appellants say that Appellee was required to "gather sufficient information and perform an analysis to have a proper basis to exercise its 'best judgment' and at least follow its own guidelines and procedures." Appellant's Br. 24. Whether Appellee did this, Appellants argue, is a question of fact for the jury.

We disagree. As the district court noted, it is well settled that "when the terms of a voluntary contract are clear and unambiguous, . . . the contracting parties are bound by those terms, and a court is powerless to rewrite the contract to make it more reasonable or advantageous for one of the contracting parties." Emergency Assocs. of Tampa, P.A. v. Sassano, 664 So. 2d 1000, 1003 (Fla. 2d DCA 1995); accord Institutional & SuperMarket Equip., Inc. v. C & S Refrigeration, Inc., 609 So. 2d 66, 68 (Fla. 4th DCA 1992); Nat'l Health Labs, Inc. v. Bailmar, Inc., 444 So. 2d 1078, 1080 (Fla. 3d DCA 1984). The district court correctly characterized the plain meaning of the Dealership Agreement and section 9(a):

Under the [Dealership] Agreement, it is [Appellee's] own judgment that controls, not EHF's judgment, not a jury's judgment and not a reasonable business person's judgment. [Section 9(a)] merely requires that [Appellee] use its best judgment in determining the relocation of its dealerships. This clear and unambiguous provision cannot be interpreted as opening the door for a jury to second-guess [Appellee's] judgment or as setting limits on [Appellee's] reasons for making a relocation determination.

Turning to Appellants' second argument, the implied covenant of good faith and fair dealing is a part of every contract under Florida law. See Burger King Corp. v. Weaver, 169 F.3d 1310, 1315 (11th Cir.), cert. dismissed 528 U.S. 948, 120 S. Ct. 370 (1999). But the implied covenant cannot override an express contractual term. See Ins. Concepts and Design, Inc. v. HealthPlan Servs., Inc., 785 So. 2d 1232, 1234 (Fla. 4th DCA 2001) (citing Weaver, 169 F.3d at 1317-18). Rather than serving as an independent term within a contract, the implied covenant "attaches . . . to the...

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