Chrysler Motors Corp. v. Lee Janssen Motor Co.

• Decision Date: 30 June 1995
• Docket Number: No. S-94-895,S-94-895
• Citation: 534 N.W.2d 309,248 Neb. 322
• Parties: CHRYSLER MOTORS CORPORATION, a Delaware Corporation, Appellant, v. LEE JANSSEN MOTOR COMPANY, a Nebraska Corporation, et al., Appellees.
• Court: Nebraska Supreme Court

Page 309

534 N.W.2d 309

248 Neb. 322

CHRYSLER MOTORS CORPORATION, a Delaware Corporation, Appellant, v. LEE JANSSEN MOTOR COMPANY, a Nebraska Corporation, et al., Appellees.

No. S-94-895.

Supreme Court of Nebraska.

June 30, 1995.

Syllabus by the Court

1. Constitutional Law: Statutes: Appeal and Error. The constitutionality of a statute is a question of law; accordingly, the Nebraska Supreme Court is obligated to reach a conclusion independent of the decision by the trial court.

2. Constitutional Law: Statutes: Proof. The burden of establishing the unconstitutionality of a statute is on the one attacking its validity.

3. Constitutional Law: Statutes: Presumptions. A statute is presumed to be constitutional, and all reasonable doubts will be resolved in favor of its constitutionality.

4. Administrative Law: Presumptions. Members of a commission are presumed to be fair and impartial.

5. Administrative Law: Motor Vehicles: Franchises: Legislature. The authority to regulate the franchise rights of automobile manufacturers and dealers in Nebraska is clearly within the power of the Legislature. It is within the authority of the Legislature to require that termination proceedings involving franchises be heard and determined by the Nebraska Motor Vehicle Industry Licensing Board.

6. Motor Vehicles: Franchises. Matters involving the distribution and sale of motor vehicles vitally affect the general economy of the state, the public interest, the public welfare, and public safety, and distribution and sales under the franchise system require the exercise of the state's police power to insure the public welfare, to regulate commerce, to establish guidelines for enforcement of a fair and equitable balance between parties to such franchises, and to provide judicial relief from unfair and inequitable practices affecting the public interest.

Robert D. Kinsey, Jr., and Richard L. Rice, of Kinsey Ridenour Becker & Kistler, Lincoln, for appellant.

Michael K. High, of Bruckner, O'Gara, Keating, Hendry, Davis & Nedved, P.C., Lincoln, for appellee Lee Janssen Motor Co.

Don Stenberg, Atty. Gen., and Paul N. Potadle, Lincoln, for appellees Neb. Motor Vehicle Industry Licensing Bd. et al.

WHITE, C.J., CAPORALE, FAHRNBRUCH, LANPHIER, WRIGHT, and CONNOLLY, JJ., and LIKES, District Judge.

WRIGHT, Justice.

Chrysler Motors Corporation (Chrysler) appeals from the Lancaster County District Court's dismissal of its declaratory judgment action, which challenged the constitutionality of certain provisions of the motor vehicle industry licensing statutes. The court found that the hearing provisions of Neb.Rev.Stat. §§ 60-1420 to 60-1435 (Reissue 1993) were not contrary to the due process guarantees of the Nebraska or U.S. Constitution, and dismissed the action.

SCOPE OF REVIEW

The constitutionality of a statute is a question of law; accordingly, the Nebraska Supreme Court is obligated to reach a conclusion independent of the decision by the trial court. State v. Popco, Inc., 247 Neb. 440, 528 N.W.2d 281 (1995).

FACTS

Chrysler is a Delaware corporation licensed and doing business in the State of Nebraska as a new motor vehicle manufacturer. Lee Janssen Motor Company (Janssen) is a Nebraska corporation doing business in McCook, Nebraska, as an authorized new car and truck dealer of Chrysler products. The Nebraska Motor Vehicle Industry Licensing Board (Board) is a Nebraska administrative agency created pursuant to Neb.Rev.Stat. §§ 60-1401.01 to 60-1440 (Reissue 1993). At the times relevant to this opinion, the Board was chaired by Alvin Abramson, director of the Department of Motor Vehicles, and included nine other individuals (the members of the Board).

In the early 1970's, Chrysler and Janssen executed and entered into direct dealer agreements for the Chrysler, Plymouth, and Dodge lines. In 1990, restated sales and service agreements for Chrysler vehicles were executed by Chrysler and Janssen to replace the previous direct dealer agreements. The 1990 agreements are the basis for Chrysler's action to terminate the Janssen franchise.

Chrysler named as defendants Janssen, the members of the Board in their official capacities, and the Board as a corporate entity. Chrysler's amended petition for declaratory judgment pursuant to Neb.Rev.Stat. §§ 25-21,149 to 25-21,164 (Reissue 1989) alleged, inter alia, that the chairman of the Board, the executive director of the Board, and the members of the Board, "acting in concert with other Board members or individually, pursuant to Neb.Rev.Stat. §§ 60-1420 and 1425, [are] required to perform an act not legally authorized or which exceeds or abuses the authority conferred upon [the Board]." The amended petition refers to a portion of the provisions of § 60-1420, which states: "(1) Except as provided in subsection (2) of this section, no franchisor shall terminate or refuse to continue any franchise unless the franchisor has first established, in a hearing held pursuant to section 60-1425, that: (a) The franchisor has good cause for termination or noncontinuance...."

Chrysler alleged that the right to terminate Janssen's franchise required the exercise of judicial powers in excess of the Board's authority and, as such, the Board was without jurisdiction and authority to resolve the dispute. Chrysler further alleged that § 60-1420, which requires Chrysler to appear before the Board "to obtain the Board's approval prior to termination of a franchise ... violates the due process rights guaranteed to Chrysler by the Nebraska Constitution, Article I, Section 3." Chrysler asserts that the Board is not a neutral, impartial, and detached decisionmaker and that the compositional bias of the Board violates the due process rights guaranteed to Chrysler by the 14th Amendment to the Constitution of the United States.

Chrysler requested two declarations: first, that the Board is without jurisdiction to determine the parties' rights under the agreements, and second, that the requirements of § 60-1401.01 et seq., specifically § 60-1420 requiring proceedings before the Board prior to termination of a franchise, violate the due process guarantees provided in Neb. Const. art. I, § 3, and the 14th Amendment to the Constitution of the United States. Finally, having attacked the right of the Board to hear termination cases, Chrysler petitioned the district court to declare that Chrysler was entitled to terminate Janssen's dealership franchise.

The members of the Board denied that they had been exercising power "not legally authorized or which exceeds or abuses the authority conferred" upon the Board. The Board asserted that the court had no jurisdiction because the state had not waived its sovereign immunity with respect to a declaratory judgment. Janssen generally denied Chrysler's allegations and subsequently filed a motion for summary judgment on the constitutional issue. The Board filed a motion for summary judgment on the issue of the Board's sovereign immunity.

On July 13, 1994, the district court, inter alia, made the following findings:

2. On or about January 12, 1993, Chrysler notified Janssen that it was terminating its dealership agreements. Neb.Rev.Stat. § 60-1420 (Cum.Supp.1992) prohibits the termination of a car dealership franchise unless the manufacturer establishes good cause for the termination at a hearing before the Board. Chrysler claims that the hearing requirement violates the due process guarantees under Article I. Sec. 3 of the Constitution of the State of Nebraska and the Fourteenth Amendment of the United States Constitution.

3. The Motion for Summary Judgment filed by the Board is based on the claim that an action against the Board is, in effect, an action against the state and the state has not waived its sovereign immunity with respect to proceedings under the Declaratory Judgment Act. Since this action challenges the validity of a statute, there is no waiver of sovereign immunity with respect to the Board itself.... The Motion for Summary Judgment should be sustained as to the Board itself.

4. Janssen's Motion for Summary Judgment concerns the constitutional issues raised by Chrysler. As noted above, any termination of a franchise requires the manufacturer to first appear before the Board to obtain the Board's approval of such termination. Neb.Rev.Stat. § 60-1420 (Cum.Supp.1992). Pursuant to Neb.Rev.Stat. § 60-1402 (Reissue 1988), the Board consists of (i) the Director of Motor Vehicles; (ii) one factory representative; (iii) one member of the general public; (iv) one motorcycle dealer; (v) three new motor vehicle dealers; and (vi) two used motor vehicle dealers and one trailer dealer or a combination motor vehicle or trailer dealer.

5. Chrysler claims that the composition of the Board is constitutionally infirm in that it deprives it of a neutral and detached decision-maker. In support of this argument Chrysler relies upon several decisions from the State of California.... Understandably, the composition of the Nebraska board raises a "perception" of nonneutrality....

....

7. Chrysler's concern with the neutrality of the Board is understandable. Nevertheless, in light of the de novo review provided by Section 84-917, the challenged statutory scheme does not violate the due process guarantees of the Nebraska and United States Constitutions. The California decisions are inapplicable.

IT IS ORDERED that the Motion for Summary [Judgment] of the Nebraska Motor Vehicle Licensing Board be sustained as to the Board and that the amended petition be dismissed as to the Board for lack of jurisdiction.

IT IS FURTHER ORDERED that the Motion for Summary Judgment of Lee Janssen Motor Company be sustained as to the constitutionality of the hearing requirements of Neb.Rev.Stat. § 60-1420 et seq.; the court finds that such provisions are not contrary to the due process guarantees of the Nebraska or United States Constitutions.

Chrysler's motion for new trial, filed on July 21,...