Belleville Toyota v. Toyota Motor Sales

• Decision Date: 15 March 2002
• Docket Number: No. 90340.,90340.
• Parties: BELLEVILLE TOYOTA, INC., Appellee, v. TOYOTA MOTOR SALES, U.S.A., INC., et al., Appellants.
• Court: Illinois Supreme Court

770 N.E.2d 177

199 Ill.2d 325

264 Ill.Dec. 283

BELLEVILLE TOYOTA, INC., Appellee, v. TOYOTA MOTOR SALES, U.S.A., INC., et al., Appellants.

No. 90340.

Supreme Court of Illinois.

March 15, 2002.

Rehearing Denied May 29, 2002.

Thomas M. Crisham, Michael C. Bruck, David M. Jenkins, Jean M. Prendergast, of Crisham & Kubes, Ltd., and William R. Quinlan, Chicago, for appehants.

Richard A. Mueller, Dudley W. Von Holt, Edwin G. Harvey, of Thompson Coburn L.L.P., St. Louis, Missouri, and Thomas Q. Keefe, Belleville, for appellee.

Justice FITZGERALD delivered the opinion of the court:

Plaintiff, Belleville Toyota, Inc., sued defendants, Toyota Motor Sales, U.S.A., Inc., and Toyota Motor Distributors, Inc. Defendants are, respectively, the authorized importer and the wholesale distributor of new Toyota vehicles in the United States. Plaintiff claimed that defendants breached certain dealership agreements by allocating to plaintiff less than the full number of Toyota vehicles to which plaintiff was entitled. Plaintiff also claimed that defendants' conduct violated the Motor Vehicle Franchise Act (Act) (815 ILCS 710/1 et seq. (West 2000)). Following a jury trial, the circuit court of St. Clair County entered a multi-million dollar judgment against defendants. On appeal, the appellate court rejected defendants' numerous claims of error and affirmed the judgment of the trial court. 316 Ill.App.3d 227, 250 N.E.2d 938; 260 Ill.Dec. 469. 738 N.E.2d 938. We granted defendants' petition for leave to appeal. 177 Ill.2d R. 315. For the reasons discussed below, we affirm in part and reverse in part the judgment of the appellate court and remand this matter to the circuit court for further proceedings.

BACKGROUND

In 1973, Bill Newbold acquired an ownership interest in a Toyota dealership in Belleville, Illinois, and took over the dealership's day-to-day operations. The dealership, doing business under the name Bill Newbold Toyota, was one of approximately 100 Toyota dealerships in the five-state Chicago region. Bill Newbold, along with his son, Kent, operated the dealership under a series of dealer agreements with defendants. The earliest of the dealer agreements at issue in this litigation was executed in June 1980, and provided for a six-year term. Under the 1980 agreement, plaintiff was required to submit orders for Toyota products on forms supplied by defendants. In the event of a shortage of Toyota products, the "unit allocation" provision of the contract required that vehicles be allocated to plaintiff "principally on the basis of sales performance during the most recent representative period of adequate supply."

In 1986, upon expiration of the 1980 agreement, the parties entered into a new dealer agreement with a one-year term. In 1987, the parties entered into another one-year agreement, and in 1988, entered into a six-year agreement. Under the 1986, 1987 and 1988 agreements, defendants were to use their"best efforts" to provide Toyota products to plaintiff, subject to available supply. In the event of a shortage, defendants were required to allocate Toyota products among its dealers in a "fair and equitable manner."

In June 1989, defendants notified plaintiff of their intent to open a new Toyota dealership in Collinsville, Illinois. In response, on August 8, 1989, plaintiff filed a complaint against defendants under the Act, seeking to enjoin them from establishing a Collinsville dealership. Plaintiff twice amended its complaint to include claims for breach of contract and additional violations of the Act. Plaintiff alleged that defendants failed to allocate Toyota vehicles in the quantities contractually required and that defendants fraudulently concealed their conduct. According to plaintiff, defendants' breach was not discovered until the fall of 1990. Plaintiff farther alleged that, in violation of the Act, defendants' allocation of vehicles was arbitrary, capricious, in bad faith, and unconscionable; defendants concealed their arbitrary and capricious allocation system; and defendants' conduct was willful and wanton. The trial court dismissed with prejudice plaintiff's claim for injunctive relief and denied defendants' motions challenging, inter alia, the timeliness of plaintiff's claims. In 1997, following several years of discovery, the parties proceeded to trial.

At trial, plaintiff maintained that, as the result of certain import restrictions under a voluntary restraint agreement (VRA) between the United States and Japan, there was a shortage of Toyota vehicles during the 1980s. Plaintiff contended that, due to this shortage, defendants were obligated, under the "unit allocation provision" contained in the 1980 dealer agreement, to allocate Toyota vehicles to the dealers based on "sales performance during the most recent representative period of adequate supply." According to plaintiff, defendants failed to do so. In the alternative, plaintiff maintained that, even absent a shortage of Toyota vehicles, the allocation system defendants used, which they described to plaintiff as a "turn and earn" system, did not comply with the 1980 agreement requiring an order system. Plaintiff further maintained that defendants' so-called "turn and earn" system, which purportedly allocated cars based on how quickly a dealer moved its inventory, did not function in this way. Rather, the vehicle allocation system was arbitrary and subject to manipulation, and was used in a discriminatory way, all in violation of the Act, as well as the four dealer agreements at issue in the litigation. Plaintiff's damage expert estimated that, during the 1980s, plaintiff was shorted thousands of vehicles by defendants, resulting in lost profits of $5 million to $ 11 million. Defendants maintained at trial that there was no shortage of Toyota vehicles, and that its allocation system, which defendants referred to as a "balanced day supply" system, was clear and fair. Under a "balanced day supply" system, allocations are made based on a dealer's past sales performance, rate of sales, and remaining inventory. Each dealer is allocated a "days supply" of vehicles, i.e., that number of vehicles needed so that all dealers, theoretically, exhaust their inventory on the same day. Defendants also maintained that, unlike the domestic automobile manufacturers, they never used a custom order system. Defendants also asserted that plaintiff, by its conduct, waived any claims against defendants; plaintiff's claims were barred by its own breach of the dealer agreements; and pursuant to the parties' course of performance, defendants' conduct did not constitute a breach of the dealer agreements.

After a two-week trial, which included testimony from 30 witnesses, the jury entered a verdict in favor of plaintiff, awarding damages of $ 2.5 million on plaintiff's breach of contract count, and $ 2.25 million on plaintiff's count under the Act. The trial court denied defendants' post-trial motion. Based on the jury's special finding that defendants' conduct was willful or wanton, the trial court granted plaintiff's motion for treble damages under the Act and entered judgment on that count in the amount of $ 6.75 million. See 815 ILCS 710/13 (West 2000) ("Where the misconduct is willful or wanton, the court may award treble damages"). The trial court also ruled that "judgment on Count I [breach of contract] shall be deemed satisfied upon payment of an amount on Count II [violation of the Act] which is equivalent to the judgment on Count I plus interest." Finally, the trial court reserved ruling on plaintiff's motion for attorney fees and costs under the Act (see 815 ILCS 710/13 (West 2000)) and for discovery sanctions, pending appeal, and made a Rule 304(a) finding of appealability (see 155 Ill.2d R. 304(a)).

The appellate court rejected defendants' numerous claims of error and affirmed the circuit court judgment. We granted defendants' petition for leave to appeal. 177 Ill.2d R. 315.

ANALYSIS

I. Act's Limitations Period

Defendants first argue that plaintiff's claim under the Act was barred based on the four-year limitations period contained in the statute. 815 ILCS 710/14 (West 2000). Defendants contend that where, as here, a plaintiff's cause of action is purely statutory, and the statute contains its own "built-in" limitations period, compliance with the limitations period is an element of the plaintiff's case and a jurisdictional prerequisite to the plaintiff's right to sue. See Pasquale v. Speed Products Engineering, 166 Ill.2d 337, 366-67, 211 Ill.Dec. 314, 654 N.E.2d 1365 (1995); Demchuk v. Duplancich, 92 Ill.2d 1, 6-7, 64 Ill.Dec. 560, 440 N.E.2d 112 (1982). Defendants argue that because plaintiff failed to comply with the limitations period set forth in the Act, plaintiff's cause of action under the statute was extinguished.

Plaintiff initially counters that defendants' position before this court is contrary to their position at trial and, therefore, defendants are precluded from making this argument. See McMath v. Katholi, 191 Ill.2d 251, 255, 246 Ill.Dec. 321, 730 N.E.2d 1 (2000). Plaintiff also asserts that the limitations period contained in section 14 of the Act functions as an ordinary statute of limitations and is not a jurisdictional prerequisite to suit. See People v. Wright, 189 Ill.2d 1, 8-10, 243 Ill.Dec. 198, 723 N.E.2d 230 (1999). Ordinarily, principles of waiver do not permit a party to complain of an error where to do so is inconsistent with the party's position taken in an earlier court proceeding. McMath, 191 Ill.2d at 255,246 Ill.Dec. 321,730 N.E.2d 1. Defendants' argument, however, implicates the subject matter jurisdiction of the circuit court. The issue of subject matter jurisdiction cannot be waived. Currie v. Lao, 148 Ill.2d 151, 157, 170 Ill.Dec. 297, 592 N.E.2d 977 (1992); People ex rel. Compagnie Nationals Air France v. Giliberto, 74 Ill.2d 90, 105, 23 Ill.Dec. 106, 383 N.E.2d 977 (1978). Therefore, the issue may be...