Grand Motors, Inc. v. Ford Motor Co., 80-0587CV-W-0

Citation564 F. Supp. 34
Decision Date21 December 1982
Docket NumberNo. 80-0587CV-W-0,81-0560-CV-W-0.,80-0587CV-W-0
PartiesGRAND MOTORS, INC., et al., Plaintiffs, v. FORD MOTOR COMPANY, Defendant. FORD MOTOR CREDIT COMPANY, Plaintiff, v. GRAND MOTORS, INC., et al., Defendants.
CourtUnited States District Courts. 8th Circuit. Western District of Missouri

COPYRIGHT MATERIAL OMITTED

George E. Feldmiller, W. Perry Brandt, Kansas City, Mo., for defendant Ford Motor Co. and plaintiff Ford Motor Credit Co.

Robert F. Redmond, III, David M. Harding, Kansas City, Mo., for plaintiff and defendant, Grand Motors, Inc.

MEMORANDUM DECISION AND ORDER

ROSS T. ROBERTS, District Judge.

Pending before the Court are motions for summary judgment and partial summary judgment in these two consolidated cases. Ford Motor Company (Ford) has moved that summary judgment be granted in its favor in Case No. 80-0587. In Case No. 81-0560, Ford Motor Credit Company (FMCC) has moved for partial summary judgment on its claim, and also for summary judgment in its favor on defendants' counterclaim. For the reasons stated below, the two former motions will be granted, while the latter will be denied.

On September 12, 1977, Grand Motors, Inc., and Ford executed a "Ford Sales and Service Agreement" (the dealership agreement) which established Grand Motors, Inc., as an authorized dealer of Ford-Mercury products, and set forth the respective rights and obligations of the contracting parties. The dealership, located in Cameron, Missouri, was to be operated under the name "Don Anderson Ford-Mercury, Inc." Donald E. Anderson and Grant A. Ragsdale were corporate officers and the shareholders of Grand Motors, Inc.1

At the inception of the dealership, Grand Motors, Inc., also executed an "Automotive Wholesale Plan Application for Wholesale Financing and Security Agreement" (the financing agreement) with FMCC, under which FMCC agreed to establish and maintain for the dealership a wholesale line of credit, and to make advances to the dealership to finance its inventory. In return, FMCC was granted a purchase money security interest in all inventory and proceeds from the disposition thereof. Anderson and Ragsdale, together with their wives, Mary A. Anderson and Joan P. Ragsdale, executed a "Continuing Guaranty", whereby they agreed to be personally liable for all advances made under the financing agreement.

In October, 1977, Grand Motors, Inc. and FMCC entered into a "Capital Loan Security Agreement" (the capital loan agreement) whereby FMCC made loans for the purchase and operation of the dealership. The Andersons and Ragsdales also executed a personal guaranty of the corporate obligations under the capital loan agreement and its supplements. In October, 1978, Grand Motors, Inc., executed with FMCC a "Supplement to Capital Loan Security Agreement", pursuant to which Grand Motors, Inc., agreed to pay FMCC $77,148.00 as the balance due under the capital loan agreement.

Operation of the automobile agency proved to be unprofitable, and on August 20, 1979, Don Anderson Ford-Mercury, Inc., sent Ford a letter resigning its dealership. In terminating its affairs, the dealership desired to return to Ford certain unused inventory in return for credit against the amounts owed under the financing and capital loan agreements. Plaintiffs were informed by representatives of Ford that before the company would agree to reacquire the inventory a general release in favor of Ford would be required. Plaintiffs complied with that demand on August 23, 1979, executing a "General Release" which released and discharged Ford "from all claims and demands whatsoever which ... any of the undersigned might or shall have by reason of anything whatsoever....." The circumstances attending the execution of the release will be developed more fully below. Following execution of the release,2 Ford accepted the return of unused inventory as well as the resignation of the dealership. The dealership's remaining assets were liquidated and the proceeds applied to debts owed FMCC.

On June 19, 1980, Grand Motors, Inc., together with the Andersons and the Ragsdales,3 filed their four-count complaint in Case No. 80-0587, alleging that Ford had violated the Automobile Dealers Franchise Act, 15 U.S.C. Sec. 1221 et seq. (Count I), that Ford had made fraudulent misrepresentations to plaintiffs (Count II), that Ford tortiously interfered with plaintiffs' contractual relations (Count III), and that Ford was liable to plaintiffs for punitive damages as a result of the actions complained of (Count IV). Plaintiffs' complaint charged, inter alia, that operation of the dealership was unprofitable due to the failure of Ford to provide the necessary support and guidance contemplated in the dealership agreement and in breaching oral promises made with respect to the quantities and mix of vehicles to be provided the dealership. Plaintiffs allege further that they found a qualified purchaser for the dealership, but that Ford arbitrarily refused to approve a sale to that individual, thus forcing the liquidation of the dealership at a substantial economic loss.

In August, 1980, Ford moved for summary judgment on three grounds: (1) that the individual plaintiffs lacked standing; (2) that the claims were barred by execution of the release; and (3) that the count seeking punitive damages failed to state a claim for relief. By Order dated February 16, 1981, Judge William R. Collinson denied Ford's motion without prejudice in order to "permit the case to be more fully developed through discovery." Ford was left free to renew its motion upon completion of discovery.

Following the Court's denial of summary judgment, FMCC filed suit in Case No. 81-0560 against Grand Motors, Inc., the Andersons, the Ragsdales and Robert F. Redmond III, for sums claimed to be due and owing FMCC under the financing and capital loan agreements. Counts I and III of the complaint sought to recover from Grand Motors, Inc., the sums of $16,203. and $39,612. respectively, for the unpaid balances purportedly remaining under the aforesaid agreements. Counts II and IV sought to impose those liabilities upon the Andersons and Ragsdales on the basis of their personal guaranties of the corporate obligations. Count V was brought against former officers and directors of the corporation (alleged to be Donald E. Anderson, Joan P. Ragsdale, Grant A. Ragsdale and Robert F. Redmond III), as statutory trustees of the defunct corporation, and sought recovery of the same amounts. Plaintiffs in turn filed a counterclaim, alleging FMCC to be an agent of Ford and incorporating their complaint in Case No. 80-0857. Prefatory to that appended document, plaintiffs charge that FMCC had actual or constructive knowledge of Ford's fraudulent misrepresentations, and broadly claim that FMCC acted in concert with Ford with respect to each of the claims asserted against Ford. The suit brought by FMCC was thereafter ordered consolidated with Case No. 80-0587.

With discovery largely complete in both cases, Ford again moves for summary judgment in its favor in Case No. 80-0587. FMCC joins in that motion by asking for partial summary judgment on the issue of liability in Case No. 81-0560, and for summary judgment against defendants on their counterclaim in the same case.

MOTION BY FORD IN CASE NO. 80-0587

The single ground argued by Ford in its renewed quest for summary judgment is that plaintiffs' claims are barred by execution of the general release. For their part, plaintiffs seek to avoid summary judgment by arguing that the release was void for lack of consideration, that the release was induced by economic coercion and duress, and that the release was not intended to be a release of all claims against Ford, but only a limited release tied strictly to the return of inventory. Each of these contentions will be examined seriatim.

Summary judgment is appropriate where "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." Rule 56(c), Fed.R.Civ.P. In passing on a motion for summary judgment, a court must view the facts presented, plus all reasonable inferences to be drawn therefrom, in the light most favorable to the party opposing the motion. Kuehn v. Garcia, 608 F.2d 1143, 1146 (8th Cir.1979); Inland Oil and Transport Co. v. United States, 600 F.2d 725, 728 (8th Cir.1979), cert. denied, 444 U.S. 991, 100 S.Ct. 522, 62 L.Ed.2d 420 (1979). Where the moving party establishes beyond controversy that no factual dispute requiring resolution by trial exists, however, the granting of summary judgment is entirely proper, lest the rule's salutory purpose of avoiding needless and costly litigation be defeated. Roberts v. Browning, 610 F.2d 528, 531 (8th Cir.1979); United States v. Porter, 581 F.2d 698, 703 (8th Cir.1978).

The policy of the law being to encourage freedom of contract and the peaceful settlement of disputes, Sanger v. Yellow Cab Company, Inc., 486 S.W.2d 477, 480 (Mo. banc 1972), a release will be presumed valid and, as an affirmative defense, may be given effect by means of summary judgment. Dobbins v. Kawasaki Motors Corporation, U.S.A., 362 F.Supp. 54, 56-57 (D.Or.1973); Oskey Gasoline & Oil Co., Inc. v. Continental Oil, 534 F.2d 1281 (8th Cir. 1976); Jackson v. Riley Stoker Corporation, 57 F.R.D. 120 (E.D.Penn.1971). Where, as in this case, there is no dispute as to the execution of a release, the burden is on the party attacking the release to establish its invalidity. McMahon v. Meredith Corporation, 595 F.2d 433, 438 (8th Cir.1979); Jenkins v. Simmons, 472 S.W.2d 417, 420 (Mo. 1971). Absent a showing of fraud, duress, illegality or mutual mistake, the language of an otherwise voluntary release will be given full effect. Coral Gables Imported Motorcars v. Fiat Motors, 673 F.2d 1234, 1238 (11th Cir.1981); Dickun v. United States, 490 F.Supp....

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