Butnaru v Ford Motor Company

• Decision Date: 07 June 2001
• Docket Number: 000513
• Citation: 84 S.W.3d 198
• Parties: Hanan Butnaru and Gil Butnaru, Petitioners v. Ford Motor Company, RespondentSUPREME COURT OF TEXAS
• Court: Texas Supreme Court

Hanan Butnaru and Gil Butnaru, Petitioners v Ford Motor Company, Respondent

No. 00-0513

SUPREME COURT OF TEXAS

Argued on February 14, 2001

June 7, 2001

On Petition for Review from the Court of Appeals for the Fourth District of Texas

Justice Baker delivered the opinion of the Court.

James A. Baker, Justice

This case involves the interplay between the Texas Motor Vehicle Board and Texas' district courts. The principal issue is whether the Board has primary jurisdiction over any issues related to a prospective dealership transferee's tortious-interference claim. Because we conclude the Board does have primary jurisdiction over an issue related to this claim, the trial court should abate its proceedings until the Board has the opportunity to decide that issue. We further conclude that the trial court did not abuse its discretion by granting a temporary injunction in this case. Accordingly, we reverse the court of appeals' judgment and its order dissolving the temporary injunction, and we remand the cause to the trial court for further proceedings.

I. BACKGROUND

Martin Graf is the sole shareholder of Graf Ford, Lincoln, Mercury, Inc., a dealership in Del Rio, Texas. The dealership's agreement with Ford provides that if Graf Ford proposes to transfer the dealership, Ford shall have a right of first refusal to purchase the dealership on the same terms and conditions that the proposed buyer agreed to, "regardless of whether the proposed buyer is qualified to be a dealer." A Ford representative testified that this provision's purpose, and the purpose of similar provisions in other standard Ford-dealership agreements, is "to be able to put into business dealers who [Ford feels] are qualified whenever [Ford has] the opportunity."

In 1999, Hanan and Gil Butnaru contracted to buy the Graf dealership. They also contracted to buy the real property upon which the dealership was located. Graf and J.M. Barton owned the property. Graf told the Butnarus about Ford's right of first refusal. In addition, both agreements were conditioned upon Ford's approving Hanan Butnaru as an authorized dealer and warranted that neither agreement conflicted with any prior agreement to which Graf or Barton were parties.

In September 1999, Graf told Ford that he intended to sell the dealership to the Butnarus. The Butnarus then filed a Prospective Dealer Application with Ford, seeking approval as an authorized dealer. A month later, Ford informed Graf that it intended to exercise its right of first refusal and offered to pay the Butnarus' reasonable expenses incurred in negotiating the purchase and sale agreements. On the same day, Ford assigned its right of first refusal to an existing Ford dealer. Ford and Graf agreed that Ford would indemnify Graf against damages arising from Ford's exercising its right of first refusal and that Graf would cooperate with Ford in defending any action challenging the right.

The Butnarus sued Graf, Graf Ford, and Barton, anticipating their breaching the purchase and sale agreements, and sued Ford for tortiously interfering with the agreements. They claim Ford tortiously interfered because Ford's right of first refusal violated the Texas Motor Vehicle Commission Code, which prohibits a manufacturer from denying or preventing a dealership transfer to a qualified applicant. See Tex. Rev. Civ. Stat. art. 4413(36), §§ 5.02(b)(8), 5.01B(c)(1), (c)(2).¹ Thus, the Butnarus sought a declaration that Ford's right of first refusal was unenforceable and a declaration of the parties' rights and obligations under the agreements. They also requested a temporary injunction to prevent Ford or its assignees from exercising its right of first refusal during the suit. Ford opposed this request and filed a plea to the jurisdiction. Ford argued that the Board has exclusive jurisdiction to determine whether a manufacturer has violated the Code's provisions. The trial court denied Ford's plea and granted the injunction.

Ford sought interlocutory review of the trial court's temporary injunction. The court of appeals held that the trial court did not have jurisdiction over the Butnarus' claims, "to the extent their claims are based on violations of the [Code]," because the Code grants the Board exclusive jurisdiction over alleged Code violations. 18 S.W.3d 762, 767. The court also held that the Code does not violate the Texas Constitution's open-courts provision, which prohibits the Legislature from unreasonably abrogating well-established common-law claims. The court explained that the Code merely confers new statutory rights on motor vehicle dealers and leaves "all others in the same position they previously occupied." 18 S.W.3d at 768. Therefore, the court concluded that "the Butnarus can sue Ford . . . for tortious interference with contract, breach of contract, and declaratory relief. They simply cannot base those causes of action on [Code] violations . . . ." 18 S.W.3d at 768. The court then remanded the non-Code claims and, holding that the Butnarus did not establish that their legal remedy was inadequate, dissolved the trial court's temporary injunction. 18 S.W.3d at 769-71.

After the court of appeals issued its decision, the assignee of Ford's right of first refusal applied to the Board for a transfer of Graf's dealership license. The Butnarus filed a complaint with the Board to prevent the transfer. The administrative law judge held a pre-hearing conference on whether the Board had jurisdiction to resolve this dispute and whether the Butnarus have standing to object to the transfer. The administrative law judge, based on the court of appeals' decision in this case, issued a proposal for decision recommending that the Board not exercise jurisdiction over the complaint based on the Butnarus' purported lack of standing. The record does not indicate whether the Board adopted the administrative judge's recommendation.

In the meantime, the Butnarus petitioned this Court for review. Typically, jurisdiction over an order granting or denying a temporary injunction is final in the courts of appeals. See Tex. Gov't Code § 22.225(b)(4). However, because the court of appeals' decision here conflicts with another court of appeals' decision, this Court has jurisdiction. See Tex. Gov't Code § 22.225(c). Specifically, the court of appeals' holding that the Code does not violate the Texas Constitution's open-courts provision conflicts with David McDavid Nissan, Inc. v. Subaru, Inc., 10 S.W.3d 56, 68 (Tex. App.--Dallas 1999), reversed, __ S.W.3d __ (Tex. 2001). In David McDavid Nissan, Inc., the court of appeals held that the Board's exclusive jurisdiction abrogates a plaintiff's common-law claims without reasonably substituting another remedy and thus contravenes the open-courts provision. 10 S.W.3d at 68. We granted the Butnarus' petition, as well as the petition in David McDavid Nissan, Inc., to resolve this conflict.

In David McDavid Nissan, Inc., we held that the Legislature did not grant the Board exclusive jurisdiction to resolve disputes under the Code unless the Code expressly requires the Board to decide a particular issue. __ S.W.3d at __. Rather, the trial court and the Board may share jurisdiction over some issues. David McDavid Nissan, Inc., __ S.W.3d at __. We further held that the Board has primary jurisdiction over certain issues within the Code's subject matter and, consequently, the trial court should abate its proceedings pending the Board's resolving those issues. David McDavid Nissan, Inc., __ S.W.3d at __. And, finally, we held that, because the Code did not abrogate McDavid's common-law claims, it did not violate our Constitution's open-courts provision. David McDavid Nissan, Inc., __ S.W.3d at __.

We must now decide, as we did in David McDavid Nissan, Inc., whether the trial court should have deferred to the Board under the primary jurisdiction doctrine and abated its proceedings. We must also decide whether the trial court abused its discretion by issuing a temporary injunction, preventing Ford or its assignees from exercising Ford's right of first refusal.

II. PRIMARY JURISDICTION

A. Standard of Review

When a trial court denies or grants a motion for dismissal or abatement based on the primary jurisdiction doctrine, we review its decision de novo. David McDavid Nissan, Inc., __ S.W.3d at __. This standard applies because whether an agency has primary jurisdiction is a question of law. David McDavid Nissan, Inc., __ S.W.3d at __. Accordingly, we review the primary jurisdiction questions in this case without deference to the trial court's decision. David McDavid Nissan, Inc., __ S.W.3d at __; see also Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1998) (questions reviewed de novo are reviewed without deference to the trial court's decision).

B. Applicable Law

Under the primary jurisdiction doctrine, courts consider whether the doctrine's policies justify a trial court's deference to the agency's expertise and responsibility to develop regulatory policy. Cash Am. Int'l Inc. v. Bennett, 35 S.W.3d 12, 18 (Tex. 2000). Two main policies underlie the primary jurisdiction doctrine: (1) an agency is typically staffed with experts trained in handling the complex problems in the agency's purview; and (2) great benefit is derived from an agency's uniformly interpreting its laws, rules, and regulations, whereas courts and juries may reach different results under similar fact situations. Gregg v. Delhi-Taylor Oil Corp., 344 S.W.2d 411, 413 (Tex. 1961); see also United States v. Western Pac. R.R. Co., 352 U.S. 59, 64 (1956). Accordingly, courts should defer to an agency when enforcing a claim requires resolving issues within that agency's special competence. Cash Am. Int'l Inc., 35 S.W.3d at 18. Courts should also defer to an agency when uniform ruling is essential to carry out the regulatory scheme's purposes. Cash Am. Int'l Inc., 35 S.W.3d at 18; Kavanaugh v. Underwriters Life Ins. Co., 231 S.W.2d 753,...