Cavalier Mobile Homes, Inc. v. Liberty Homes, Inc.

• Decision Date: 05 January 1983
• Docket Number: No. 280,280
• Citation: 53 Md.App. 379,454 A.2d 367
• Parties: , 1982-83 Trade Cases P 65,132, 35 UCC Rep.Serv. 1081 CAVALIER MOBILE HOMES, INC. et al. v. LIBERTY HOMES, INC.
• Court: Court of Special Appeals of Maryland

Page 379

53 Md.App. 379

454 A.2d 367, 1982-83 Trade Cases P 65,132,

35 UCC Rep.Serv. 1081

CAVALIER MOBILE HOMES, INC. et al. v. LIBERTY HOMES, INC.

No. 280.

Court of Special Appeals of Maryland.

Jan. 5, 1983.

E. Fremont Magee, Baltimore, with whom were Thomas E. Plank and David H. Bamberger, Baltimore, on the brief, for appellants.

Edward F. Canfield, Washington, D.C., with whom were Christopher A. Hansen, Towson, and Robert E. Heggestad, Washington, D.C., on the brief, for appellee.

Argued Before MASON, GARRITY and ALPERT, JJ.

ALPERT, Judge.

This appeal from judgments in the Circuit Court for Baltimore County (Raine, C.J. presiding with a jury) involves claims under the Maryland Antitrust Act and for breach of contract. Cavalier Mobile Homes, Inc. ("Cavalier"), ¹ a retail seller of mobile homes, charged Liberty Homes, Inc. ("Liberty"), a manufacturer of mobile homes, with participating in a conspiracy, the effect of which was to tie the leasing of mobile home parking spaces to the purchase of mobile homes sold by an alleged co-conspiring retail seller. Cavalier also alleged that Liberty breached its franchise and distributorship agreements which contained a 30-day notice provision for termination, in that Liberty refused to sell Cavalier a number of mobile homes allegedly ordered after the required 30 days notice had been given. At the end of plaintiff/appellant's case, the trial judge granted a motion to direct the verdict as to the four antitrust counts. The remaining breach of contract claim was submitted to the jury, which returned a verdict in Cavalier's favor in the amount of $30,386. Cavalier appeals from the directed verdicts as to the antitrust claims while Liberty has cross-appealed from the judgment entered on the jury's verdict as to the breach of contract claim.

I. The Antitrust Claim

Appellant raises five issues on appeal. For reasons which will become apparent, we need only decide one of these questions, namely:

3. Did the circuit court err in ruling that there was no evidence from which the jury could infer that Liberty had knowledge of the contracts, combinations and conspiracies between the mobile home park and the mobile home dealer and that Liberty took actions in furtherance of those contracts, combinations and conspiracies?

Inasmuch as our decision on this issue renders moot the remaining issues, we need not and therefore do not reach them. ²

The Facts

The mobile homes in which the parties to this action deal, are factory built residences designed to be towed by truck to a lot and set up on large cinder blocks. If the homeowner wishes to move thereafter, he may take his mobile home with him by removing the cinder blocks and attaching the mobile home to a truck. The home may then be towed on its own wheels to a new location.

The record indicates that because of zoning restrictions, consumers in the Baltimore metropolitan area may place their mobile homes only in specially zoned mobile home parks. Additionally, since it has been very difficult to obtain zoning to establish mobile home parks, there is a shortage of available parking spaces. This limitation directly affects the quantity of sales made by retail mobile home dealers since without a properly zoned space to park the mobile home, there generally is no possibility of a sale.

From 1973 through 1976 Liberty entered into annual agreements authorizing Cavalier to sell Liberty homes. The agreement provided that the authorization could be terminated for any reason by either party following 30 days notice. Cavalier asserts that although it was not contained in the written agreement, Liberty granted Cavalier the Baltimore metropolitan area as an "exclusive territory".

In September of 1976, Liberty gave Cavalier notice that it was terminating Cavalier as a Liberty dealer. During the same month, Liberty authorized Chesapeake Mobile Homes, Inc. ("Chesapeake"), a competitor of Cavalier, to represent it in the Baltimore market.

The appellant argued that Liberty terminated it as an authorized dealer in order to further a conspiracy to restrain trade in violation of the Maryland antitrust laws. The primary participants in the alleged conspiracy were Chesapeake and the owners of Harford Mobile Village ("Harford"). Harford was a highly desirable mobile home park which first opened in the early 1970's and continued developing in sections through 1977. Harford leased several acres of land in front of the park to Chesapeake for use as a mobile home sales lot. They also entered into agreements wherein a fee plus monthly "rent" was paid by Chesapeake to Harford to reserve vacant lots in the park for Chesapeake's customers. The same deal was offered to other mobile home dealers, several of whom paid to reserve spaces for their customers. In 1975, Harford offered Cavalier 20 lots at the then standard rate, but Cavalier refused to pay the reservation fee. Throughout this period, the record indicates that although Chesapeake had the lion's share of placements within Harford, Cavalier managed to place 47 homes in the park without paying to reserve those spaces, and that a host of other dealers, some of whom paid the reservation fee, also placed homes in not insubstantial numbers.

Cavalier attributes its termination as a Liberty dealer to the realization by Liberty that Chesapeake had valuable unlawful access to Harford which Cavalier maintained was facilitated by an illegal conspiracy. Appellant argued that evidence of meetings in 1976 between Chesapeake and Liberty's sales representative indicate that Liberty joined the conspiracy and withdrew from its dealership agreement, thereby damaging Cavalier in two ways: First, by denying it the sales of Liberty mobile homes, and; Second, by participating in the conspiracy to keep Harford a "closed-park." ³

The Maryland Antitrust Act

Counts IV, V, VII and VIII of Cavalier's second amended complaint charge Liberty with conspiracy and unfair competition violative of Md.Com.Law Code Ann. §§ 11-204(a)(1) and (6) which provide

(a) Prohibited conduct.--A person may not:

(1) By contract, combination, or conspiracy with one or more other persons, unreasonably restrain trade or commerce;

* * *

* * *

(6) Lease or make a sale or contract for the sale of a patented or unpatented commodity or service for use, consumption, enjoyment, or resale, or set a price charged for the commodity or service or discount from or rebate on the price, on the condition, agreement, or understanding that the lessee or purchaser will not use or deal in the commodity or service of a competitor of the lessor or seller, if the effect of the lease, sale, or contract for sale or the condition, agreement, or understanding may:

(i) Substantially lessen competition; or

(ii) Tend to create a monopoly in any line of trade or commerce.

Section 11-204(a)(1) is the Maryland analogue to section 1 of the Sherman Antitrust Act, 15 U.S.C. § 1. Quality Discount Tires, Inc. v. Firestone Tire & Rubber Co., 282 Md. 7, 11, 382 A.2d 867 (1978); Greenbelt Homes, Inc. v. Nyman Realty, Inc., 48 Md.App. 42, 48, 426 A.2d 394 (1981). Similarly, section 11-204(a)(6) is the Maryland equivalent of section 3 of the Clayton Antitrust Act, 15 U.S.C. § 14.

We note that § 11-202(a)(2) provides that when interpreting the Maryland Antitrust Act, we are to be guided, but not bound, by the construction given the analogous federal statutes by the federal courts. Cities Service Oil Co. v. Burch, 29 Md.App. 430, 436, 349 A.2d 279 (1975).

Application of the Law

Turning to the facts of the case at bar, we find that the appellant appeals from a directed verdict as to the antitrust claims. A directed verdict is inappropriate where there is any legally relevant and competent evidence, however slight, from which a rational mind could infer a fact which if found to exist would prevent judgment for the moving party. Impala Platinum, Ltd. v. Impala Sales (U.S.A.), Inc., 283 Md. 296, 328-29, 389 A.2d 887 (1978). All facts and the inferences reasonably deducible therefrom must be considered in the light most favorable to the party against whom the motion for a directed verdict is made. United Bank & Trust Co. of Maryland v. Schaeffer, 280 Md. 10, 12, 370 A.2d 1138 (1977). Only when the facts or inferences drawn therefrom lead to but one conclusion is a court justified in directing a verdict. Snoots v. Demorest, 254 Md. 572, 255 A.2d 12 (1969); Smack v. Jackson, 238 Md. 35, 207 A.2d 511 (1965). Even against this extremely strict standard there are nevertheless circumstances in which a directed verdict is appropriate. Whenever the facts, and any rational inferences which may be drawn from them, point so strongly toward the non-existence of an essential element of a party's cause of action or defense that no reasonable man could find for its existence, the appropriate level of non-persuasion has been reached and a directed verdict is proper.

The trial judge concluded that in order to make out its case under the Maryland Antitrust Act, Cavalier had to establish two essential facts. First, Cavalier would have to put forward proof of a conspiracy or combination between Harford and Chesapeake to "tie" illegally their products. Second, Cavalier would have to establish some participation in the conspiracy by Liberty.

Following a proper review of the facts, the trial judge found that neither fact had been proved sufficiently to withstand the motion for a directed verdict. First, the court found that there was no tie-in because there was no proof of exclusivity. ⁴ Second, he found the evidence was not legally sufficient to prove that Liberty had knowledge of or participated in an illegal conspiracy. Under the facts of this case, it is the decision regarding the second fact which ultimately determines the outcome. Even if Cavalier had proved that there was an illegal conspiracy between Harford and Chesapeake, without legally sufficient evidence that Liberty had knowledge of or...