Berglund Chevrolet, Inc. v. Va. Dep't of Motor Vehicles

• Citation: 840 S.E.2d 19,71 Va.App. 747
• Decision Date: 07 April 2020
• Docket Number: Record No. 1322-19-3
• Parties: BERGLUND CHEVROLET, INC. v. VIRGINIA DEPARTMENT OF MOTOR VEHICLES, Richard D. Holcomb, Commissioner, Virginia Department of Motor Vehicles, and General Motors, LLC
• Court: Virginia Court of Appeals

71 Va.App. 747

840 S.E.2d 19

BERGLUND CHEVROLET, INC.

v.VIRGINIA DEPARTMENT OF MOTOR VEHICLES, Richard D. Holcomb, Commissioner, Virginia Department of Motor Vehicles, and General Motors, LLC

Record No. 1322-19-3

Court of Appeals of Virginia, Lexington.

APRIL 7, 2020

Joseph M. Rainsbury (Kevin P. Oddo ; Miles & Stockbridge P.C.; Berglund Chevrolet, Inc., on briefs), Roanoke, for appellant.

Christian A. Parrish, Assistant Attorney General (Mark R. Herring, Attorney General; Donald D. Anderson, Deputy Attorney General; Julie M. Whitlock, Senior Assistant Attorney General, on brief), for appellees Virginia Department of Motor Vehicles and Richard D. Holcomb, Commissioner, Virginia Department of Motor Vehicles.

James C. McGrath (Edward V. Arnold ; Seyfarth Shaw LLP, on brief), for appellee General Motors, LLC.

Present: Chief Judge Decker, Judges Humphreys and O’Brien

OPINION BY CHIEF JUDGE MARLA GRAFF DECKER

Berglund Chevrolet, Inc. (Berglund), appeals the circuit court’s decision to affirm an administrative ruling approving the decision of General Motors, LLC (GM), to deny Berglund’s request for an increase in compensation for warranty repair work pursuant to Code § 46.2-1571. Berglund contends that the circuit court erred by misinterpreting the statute and concluding that GM had good cause to reject the request. For the reasons that follow, we hold that the circuit court did not err. Consequently, we affirm the ruling.

I. BACKGROUND¹

Berglund is an authorized dealer of certain motor vehicles manufactured by GM. It is also authorized by GM to perform warranty repairs on qualified GM vehicles. The relationship between Berglund and GM is governed by both state law, which is administered by the Department of Motor Vehicles (DMV), and GM’s sales and service agreement. See, e.g., Code § 46.2-1571 (requiring a written agreement between each manufacturer and dealer setting out respective rights and obligations regarding warranty service, subject to certain statutory provisions).

In 2017, Berglund submitted a request to GM pursuant to Code § 46.2-1571 to increase its hourly labor rate for warranty work from $117.04 to $178.31.² Berglund supported its request with written documentation that included work orders for 100 consecutive non-warranty repairs performed by Berglund. It attempted to extrapolate from each non-warranty repair what it would have been paid if the repair had been reimbursed at warranty repair rates. The documentation did not include work orders for warranty repairs.

GM denied Berglund’s request for an increase on two grounds. First, it rejected Berglund’s methodology of attempting to compare actual non-warranty retail amounts to "applicable warranty hours that would have been paid for the same type of repairs." (Emphasis added). GM asserted that Code § 46.2-1571 requires a comparison of actual charges, not "theoretical amounts." (Emphasis omitted). Second, the company noted that the proposed new labor rate for warranty repairs was almost twice the average charged by the seven other Chevrolet dealers in the area and consequently concluded that it was not reasonable under the statute.

Berglund sought review of the denial by the DMV, the agency charged with overseeing the applicable statutory scheme, under the Administrative Process Act. The DMV hearing officer heard evidence and argument and recommended the denial of Berglund’s requested rate increase. He found that the hourly warranty labor rate at which Berglund was being paid, $117.54, was "the highest of any area GM dealer."

On Berglund’s request for review of the DMV’s initial denial, the Commissioner adopted most of the hearing officer’s findings of fact. Like the hearing officer, the Commissioner concluded that Berglund’s request should be denied. The Commissioner’s rationale for the denial was based on both Berglund’s faulty methodology and shortcomings in its data. He held in part that Berglund erred by using only non-warranty repair orders and merely estimating what it would have been paid for similar warranty work. He concluded that this methodology did not comport with the analysis in Navistar, Inc. v. New Baltimore Garage, Inc., 60 Va. App. 599, 731 S.E.2d 13 (2012). The Commissioner further concluded that GM had established good cause to deny Berglund’s requested rate increase because, among other things, Berglund failed to provide actual amounts for its warranty work and admitted that the documentation it submitted contained errors.

Berglund filed a petition for appeal to the circuit court, which affirmed the Commissioner’s decision. The court noted that Code § 46.2-1571(A)(3) requires that a request for an increase in dealer service compensation must be based upon 100 consecutive repair orders, not 100 consecutive non-warranty repair orders. It also agreed with the Commissioner’s ruling that Berglund’s request failed to compare actual amounts as instructed by Navistar.

II. ANALYSIS

Berglund raises four interrelated assignments of error in this appeal. Two of the claims relate to the methodology by which it sought to prove entitlement to greater compensation for warranty work. The other two claims involve whether GM had good cause to deny its request for an increase in warranty compensation.

A. Standard of Review

The Administrative Process Act, Code §§ 2.2-4000 to -4031, governs this appeal. See Code §§ 2.2-4027, 46.2-1571(F). "[W]ith respect to ... issues of law" on appeal, the Court’s duty under the Act is "to review the agency decision de novo." Code § 2.2-4027. It is also well established that "[p]ure statutory construction, a matter within the ‘core competency of the judiciary,’ requires de novo review." Va. Emp. Comm’n v. Cmty. Alternatives, Inc., 57 Va. App. 700, 708, 705 S.E.2d 530 (2011) (quoting Citland, Ltd. v. Commonwealth ex rel. Kilgore, 45 Va. App. 268, 275, 610 S.E.2d 321 (2005) (citation omitted)). "This axiom stems from basic principles of separation of powers. ... Virginia courts do not delegate th[is] task to executive agencies." Finnerty v. Thornton Hall, Inc., 42 Va. App. 628, 635, 593 S.E.2d 568 (2004), quoted with approval in Cmty. Alternatives, 57 Va. App. at 708, 705 S.E.2d 530.

Questions of fact, by contrast, are reviewed under a substantial evidence standard. See Code § 2.2-4027. Substantial evidence is defined as "such relevant evidence as a reasonable mind might accept as adequate to support a conclusion." State Health Comm’r v. Sentara Norfolk Gen. Hosp., 260 Va. 267, 275, 534 S.E.2d 325 (2000) (quoting Va. Real Est. Comm’n v. Bias, 226 Va. 264, 269, 308 S.E.2d 123 (1983) ). This Court "defer[s] to the agency" with regard to findings of fact, "just as [it] would [to] a jury or a trial court." Citland, 45 Va. App. at 274, 610 S.E.2d 321.

The first set of issues raised by Berglund, pertaining to the methodology required under the statute, presents a question of statutory interpretation. The second set of issues raised, regarding whether GM had good cause to take an action for which the dealer filed a petition for a hearing, presents a mixed question of law and fact. Cf. Louis Latour, Inc. v. Va. Alcoholic Bev. Control Bd., 49 Va. App. 758, 774, 645 S.E.2d 318 (2007) (categorizing the issue of whether a winery had good cause to amend a franchise agreement as a mixed question of law and fact).

B. Methodology Supporting Request for Labor Rate Increase

Berglund challenges the conclusion that Code § 46.2-1571(A)(3) requires a dealer requesting an increase in compensation for warranty work to include warranty repair orders in the sample of repair orders evaluated. It also contests the related ruling that a dealer is required to compare actual warranty-work payments with actual non-warranty-work payments.

Code § 46.2-1571 expressly provides that a manufacturer’s "[c]ompensation of a dealer for ... warranty ... service ... shall not be less than the amounts charged by the dealer for the manufacturer’s ... service ... work to retail customers for nonwarranty service ... unless the amounts are not reasonable." Code § 46.2-1571(A)(1) (emphases added). The code section also states that "[i]ncreases" in compensation for dealer warranty service "shall be requested ... in writing" and "based on 100 consecutive repair orders or all repair orders over a 90-day period, whichever occurs first." Code § 46.2-1571(A)(3). The statute does not further delineate the types of repair orders to be included or specify whether the 100 consecutive orders should include both warranty and non-warranty repairs.

Settled principles provide that a court must apply the plain language of a statute unless the language is ambiguous. See, e.g., Volkswagen of Am., Inc. v. Smit, 266 Va. 444, 452, 587 S.E.2d 526 (2003), cited with approval in Navistar, 60 Va. App. at 609, 731 S.E.2d 13. A court may not "add to the words" of a statute. Baker v. Commonwealth, 278 Va. 656, 660, 685 S.E.2d 661 (2009) (quoting Farrakhan v. Commonwealth, 273 Va. 177, 181, 639 S.E.2d 227 (2007) ).

The plain language of the statute at issue refers to "100 consecutive repair orders." Code § 46.2-1571(A)(3). This language is unambiguous and does not limit the type of orders to non-warranty orders. Thus, under the statute, Berglund was required to submit data for 100 consecutive repair orders, without distinction, rather than 100 consecutive non-warranty repair orders. See also Navistar, 60 Va. App. at 611-12, 731 S.E.2d 13 (interpreting the same statute to require, in a different but related context, the use of information regarding both warranty and non-warranty work for comparison purposes). The language "100 consecutive repair orders" means exactly what it says. This Court will not add words to this already clear phrase in the statute. See Baker, 278 Va. at 660, 685 S.E.2d 661.

With regard to a dealer’s request for an increase in labor compensation for warranty repairs, the statute does not explain what the dealer must do with the 100 consecutive orders specified by the statute to...