Artman v. International Harvester Company

• Decision Date: 07 February 1973
• Docket Number: Civ. A. No. 67-356.
• Parties: James ARTMAN v. INTERNATIONAL HARVESTER COMPANY.
• Court: U.S. District Court — Eastern District of Pennsylvania

355 F. Supp. 482

James ARTMAN v. INTERNATIONAL HARVESTER COMPANY.

Civ. A. No. 67-356.

United States District Court, W. D. Pennsylvania.

February 7, 1973.

Irwin B. Wedner, Wallace & Lipton, Pittsburgh, Pa., for plaintiff.

Buchanan, Ingersoll, Rodewald, Kyle & Buerger, Pittsburgh, Pa., for defendant.

OPINION

SCALERA, District Judge.

In March of 1967, plaintiff filed a complaint alleging the right to recover damages from defendant. In the first count of his complaint, plaintiff alleged that on October 31, 1964, defendant executed in his favor three written "Dealers Sales and Service Agreements" of indefinite duration under which he was granted the right to act as a franchised dealer selling parts and light and medium duty trucks produced by the defendant. Plaintiff also alleged that in May of 1965, he and defendant "orally entered into an additional contract making plaintiff a `full line heavy duty truck' dealer," Complaint ¶ 7 and that pursuant to that contract, plaintiff had ordered and received five heavy duty motor trucks. Rounding out his first count, plaintiff alleged that defendant coerced and intimidated him in a bad faith attempt to force him to accept disadvantageous business terms not normally extant between two parties of equal bargaining strength. When plaintiff refused to accept those business terms, defendant terminated plaintiff's one oral and three written franchise agreements in a manner that violated his rights under the "Automobile Dealers' Day in Court Act," 70 Stat. 1125, 15 U.S.C.A. § 1221 et seq.

In his second count plaintiff repleads most of the factual allegations contained in his first count and then further alleges that defendant's conduct, as reflected by those pleadings, constitutes a breach of contract under Pennsylvania law.

On December 17, 1971, the defendant filed with this court a motion entitled "A Motion for Judgment on the Pleadings." In that motion defendant cited § l(b) of the Automobile Dealers' Day in Court Act 15 U.S.C.A. § 1221(b) for the proposition that the Dealers' Act affords relief only under written franchise agreements and asked this court to enter judgment in its favor with respect to the alleged oral heavy duty truck dealership agreement.

Defendant also argued that the alleged oral heavy duty truck franchise lay within the scope of the Uniform Commercial Code's Statute of Frauds controlling contracts for sale of goods Act of April 6, 1953, Pa.L. 3, as amended by § 2 of the Act of October 2, 1959, Pa.L. 1023; 12A P.S. § 2-201, and is therefore not provable in court for any purpose.

Defendant takes the position that all the contracts between defendant and James Artman were contracts calling for successive performance and providing for indefinite duration, and therefore all of those contracts could be properly terminated under Pennsylvania law at the whim of either party.

Finally, defendant's motion asks this court to hold as a matter of law that defendant's relations with and eventual termination of James Artman do not constitute acts of "bad faith coercion," within the meaning of the Automobile Dealers' Day in Court Act.

Oral argument was held on defendant's motion for judgment on the pleadings. During the argument, by agreement of counsel and pursuant to Rule 12(c) of the Federal Rules of Civil Procedure, the parties submitted and the court considered matters outside the pleadings, thus transforming the motion into one for summary judgment.

Specifically, the plaintiff submitted several purchase orders under which defendant allegedly delivered several heavy duty trucks and argued that those purchase orders operated as contract memoranda conferring written status upon the oral heavy duty truck agreement.

In a preliminary assessment, this court tentatively concluded that plaintiff's purchase order documents did not confer written status upon the alleged oral heavy duty truck agreement and therefore that agreement could not serve as the basis of any rights or remedies.

On March 10, 1972, while our decision on the summary judgment motion was still pending, plaintiff moved this court for permission to amend his complaint to allege violations of §§ 1 and 2 of the Sherman Act and to further allege that in January or February of 1965, plaintiff and defendant entered into a heavy duty truck franchise and that "said contract was reduced to writing by defendant, but not signed by plaintiff."

On August 8, 1972, 355 F.Supp. 476, this court rendered a memorandum order denying plaintiff's request for leave to allege violations of the Sherman Antitrust Act, and deferring decision on plaintiff's request to amend his complaint so as to allege that the International-Artman heavy duty truck contract was reduced to writing and signed by defendant. In that memorandum we regarded plaintiff's eleventh-hour request for leave to amend as a device that might improperly bypass the summary judgment proceedings that were then before the court. Accordingly, we placed the plaintiff on notice that we would not consider his allegation unless he brought forth evidence to substantiate them. See Glade Mountain Corp. v. R. F. C. (D.N.J.1952), 104 F.Supp. 695. The plaintiff has submitted material in support of his position and we are now prepared to consider the balance of International's motion for summary judgment.

DECISION

The defendant's motion and plaintiff's response pose a series of questions for the court's consideration: Do Artman's purchase order documents and International's delivery of heavy duty trucks pursuant to some of those documents make the alleged Artman-International oral heavy duty truck franchise a written agreement properly enforceable within the scope of the Automobile Dealers' Day in Court Act? Do those same documents render the alleged oral heavy duty truck franchise provable under the applicable statute of frauds? Does the affidavit filed by plaintiff on August 31, 1972 provide substantial evidence that the Artman-International heavy duty truck franchise was reduced to writing and signed by defendant International? Given the present state of the pleadings and proofs in this case, does International Harvester's termination of James Artman's three written franchise contracts constitute a bad faith breach of contract under Pennsylvania law? Can this court hold as a matter of law that the conduct surrounding International's termination of Artman's written franchise was not bad faith coercion or intimidation within the meaning of § 1(e) of the Automobile Dealers' Day in Court Act 15 U.S.C.A. § 1221(e)?

Section 2 of the Automobile Dealers' Day in Court Act 15 U.S.C.A. § 1222 enables an auto dealer to sue an auto manufacturer in order to:

Recover the damages by him sustained and the cost of suit by reason of the failure of the said automobile 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. . . .

The word "franchise" is defined in § 1(b) of the Act 15 U.S.C.A. § 1221(b):

The term "franchise" shall mean the written agreement or contract between any automobile manufacturer engaged in commerce and any automobile dealer which purports to fix the legal rights and liabilities of the parties to such agreement or contract. Emphasis supplied.

Thus, the Act applies only to written dealership contracts and does not cover oral agreements. Southern Rambler Sales, Inc. v. American Motors Corp., 375 F.2d 932 (5th Cir.), cert. denied, 389 U.S. 832, 88 S.Ct. 105, 19 L. Ed.2d 92 (1967); Frank Chevrolet Co. v. General Motors Corp., 304 F.Supp. 307 (N.D.Ohio 1968).

The common commercial usage of the word "franchise" implies a relationship during which two or more are bound to each other for some period of time and during which both agree to certain procedural rights and duties relating to the manner in which a retail product will be delivered, sold, and, if necessary, serviced. A franchise agreement preserves to the manufacturer some measure of control over the merchandising and general business practices of the retailer. This measure of control differentiates a franchise agreement from a simple contract of sale which allows the retailer to resell the commodity in a manner of his own choosing. The purchase order documents which plaintiff submitted for our consideration might well serve as memoranda for a series of simple contracts of sale because they set forth terms specifying the quality and quantity of what was being sold as well as the price being paid. Nonetheless, those purchase documents are devoid of any terms which reserve to the manufacturer any measure of control over the retailer's merchandising practices and lacking that type of term, they provide evidence of a simple sale of goods rather than evidence of a franchise relationship.¹ In short, these purchase documents do not bring the alleged oral heavy duty truck franchise within the scope of the Automobile Dealers' Day in Court Act.

The same reasoning applies to make the oral truck franchise unprovable under the Statute of Frauds. Pennsylvania courts have repeatedly held that dealership or distribution franchises fall within the sales section of the Uniform Commercial Code. Weilersbacher v. Pittsburgh Brewing Co., 421 Pa. 118, 218 A.2d 806 (1966); Mastrian v. William Friehofer Baking Co., 45 Pa.Dist. & Co.R.2d 237, 58 Luz. 221 (C.P. Luzerne County 1968). Those decisions bring the Artman oral heavy duty truck franchise within the scope of § 2-201 of the Code Act of April 6, 1953, Pa.L. 3, as amended by § 2 of the Act of October 2, 1959, Pa.L. 1023; 12A P.S. § 2-201 which provides that:

(1) Except as otherwise provided in this section a contract for the sale of goods for the price of $500 or more is not enforceable by way of action or defense unless there is some writing sufficient to indicate that a contract for sale has been made between the parties and

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