Cloverdale Equip. Co. v. Manitowoc Engineering Co.

• Decision Date: 13 January 1997
• Docket Number: Civil Action No. 96-40203.
• Citation: 964 F.Supp. 1152
• Parties: CLOVERDALE EQUIPMENT COMPANY, a Michigan corporation, Plaintiff, v. MANITOWOC ENGINEERING CO., A DIVISION OF the MANITOWOC COMPANY, INC., a Wisconsin corporation, Defendant.
• Court: U.S. District Court — Eastern District of Michigan

964 F.Supp. 1152

CLOVERDALE EQUIPMENT COMPANY, a Michigan corporation, Plaintiff, v. MANITOWOC ENGINEERING CO., A DIVISION OF the MANITOWOC COMPANY, INC., a Wisconsin corporation, Defendant.

Civil Action No. 96-40203.

United States District Court, E.D. Michigan.

January 13, 1997.

Christopher E. LeVasseur, Michael H. Whiting, Stark, Reagan & Finnerty, P.C., Troy, MI, for Cloverdale Equipment Co.

John E. Scott, Bruce R. Byrd, Dickinson, Wright, Moon, VanDusen & Freeman, Detroit, MI, Richard C. Ninneman, Daniel M. Janssen, Quarles & Brady, Milwaukee, WI, for Manitowoc Engineering Co.

OPINION AND ORDER GRANTING DEFENDANT SUMMARY JUDGMENT ON PLAINTIFF'S COMPLAINT AND DEFENDANT'S COUNTERCOMPLAINT

GADOLA, District Judge.

Plaintiff, Cloverdale Equipment Company ("Cloverdale"), a Michigan corporation, filed the instant action against defendant, Manitowoc Engineering, Company ("Manitowoc"), a Wisconsin corporation, on April 15, 1996, in state court. On May 10, 1996, the case was removed to this court pursuant to 28 U.S.C. § 1332; 1441.

In its complaint, Cloverdale alleges that Manitowoc violated the Michigan Farm and Utility Equipment Act ("MFUE Act"), M.C.L.A. 445.1451, et. seq., by purporting to terminate Cloverdale as a distributor of Manitowoc products without "good cause," notice and a ninety-day curative grace period, as provided for in the MFUE Act. Cloverdale seeks declaratory relief and damages. Cloverdale seeks a declaratory judgment that Manitowoc's purported termination violates the MFUE Act, together with damages as provided therein. Presently before this court is Manitowoc's motion for partial summary judgment on Cloverdale's claim for declaratory relief. For the ensuing reasons, Manitowoc's motion will be granted. This court also sua sponte grants summary judgment in favor of Manitowoc on both Cloverdale's claim for damages and Manitowoc's counterclaim.

FACTS

Manitowoc is engaged in the business of designing, manufacturing and selling lift-cranes and excavators. Liftcranes are lattice-boom cranes with lifting capacities ranging from 100 to 1500 tons. Such cranes are used primarily in the heavy construction industry to drive pile, place forms, pour concrete, set steel and erect heavy components.¹ Liftcranes, however, are also used by the marine industry to handle bulk cargo and to load and unload containers of ships. Excavators, primarily utilized in mining, dredging, and excavating industries, are lattice-boom cranes equipped with draglines and clam-shells, with bucket capacities ranging from 20,000 to 80,000 pounds.² With one exception, Manitowoc products are crawler cranes (e.g. cranes mounted on tracks similar to those found on bulldozers and military tanks).

Cloverdale is engaged in the trade of selling, renting and servicing cranes and related excavation attachments. On June 12, 1989, Manitowoc and Cloverdale entered into a "Distributorship Agreement" ("Agreement"), whereby Manitowoc appointed Cloverdale to be a non-exclusive³ distributor to sell and service Manitowoc's cranes and excavators in the state of Michigan for one year. On June 12, and each year thereafter, a new one-year Agreement was signed.

The last Agreement entered into between Cloverdale and Manitowoc covered the period June 12, 1994 through 1995, and provided in pertinent part:

13. Duration and Termination of Agreement.

(a) The effective date of this Agreement is the date first above written [June 12, 1994]. Except as provided in subparagraph 13(b) below, the Agreement shall remain in effect until June 12th, 1995, subject to the right of either party to terminate it by a ninety (90) day written notice to the other, but such termination notice shall not be given prior to July 12th, 1994.

After the expiration of the aforementioned Distributorship Agreement, the parties apparently maintained their business relationship. Then, on October 24, 1995, Manitowoc notified Cloverdale, in writing, of the termination of the distributorship relationship to take effect 90 days after receipt of the same. The notice did not specify any grounds for termination.

On June 20, 1995, after the expiration of the 1994-95 Agreement and prior to the date that Manitowoc sent Cloverdale a termination notice, the Michigan Legislature adopted the following amendment to the MFUE Act:

A supplier shall not terminate, cancel, fail to renew, or substantially change the competitive circumstances of an agreement without good cause. A supplier shall provide a dealer at least 90 days prior written notice of termination, cancellation, nonrenewal, or substantial change in competitive circumstances. The notice shall state the reasons for the action, and the dealer has 90 days to submit a plan to correct the stated deficiencies.

M.C.L.A. § 445.1457a. While Manitowoc concedes that it did not comply with the cessation criteria set out at the MFUE Act, it contends that MFUE is inapplicable to the case at hand. If applicable, Manitowoc argues that the MFUE is unconstitutional because it flagrantly violates the Contracts Clauses of both the United States and Michigan Constitutions.

DISQUALIFICATION IS NOT WARRANTED

As a preliminary matter, it should be noted that the law firm of Dickinson, Wright, Moon, VanDusen and Freeman ("Dickinson, Wright") is co-counsel for Manitowoc. Michael Gadola, son of the undersigned, to whom this case has been assigned, is a junior associate in that firm. This court has given deliberation to whether recusal is warranted based upon his son's affiliation with Dickinson, Wright, yet concluded that neither Title 28 U.S.C. § 455(a) or (b)(5)(iii) require recusal.

First, Title 28 U.S.C. § 455(b)(5)(iii) mandates disqualification when a person within the third degree of relationship to the judge "[i]s known by the judge to have an interest that could be substantially affected by the outcome of the proceeding." Courts have consistently held that a judge's kin does not have an "interest that could be substantially affected" when he or she is only an associate, as opposed to a partner, in a law firm representing a party to the action and does not actively participate in the proceeding, The seminal case on this issue is U.S. ex rel. Weinberger v. Equifax, Inc., 557 F.2d 456 (5th Cir.1977), cert. denied, 434 U.S. 1035, 98 S.Ct. 768, 54 L.Ed.2d 782, reh'g. denied, 435 U.S. 918, 98 S.Ct. 1477, 55 L.Ed.2d 511 (1978), where the court held that 28 U.S.C. § 455(b)(5)(iii) did not require disqualification of district judge whose son was only an associate in the law firm representing the defendant and did not actively participate in the proceeding,

Second, Title 28 U.S.C. § 455(a), the "catch-all" disqualification provision that applies whether or not 28 U.S.C. § 455(b)(5)(iii) is applicable, does not command recusal under the circumstances. This provision directs a judge to recuse himself when his "impartiality might reasonably be questioned." This court has determined that the instant case can be decided in a fair and unbiased manner, and that reasonable persons would not question the judge's impartiality. See Equifax, 557 F.2d 456 (holding that disqualification was not required under 28 U.S.C. § 455(a) because the judge's son was only an associate in a firm representing the defendant and under these circumstances, a reasonable man would not conclude that judge's impartiality might reasonably be questioned). See also Hamid v. Price Waterhouse, 51 F.3d 1411, 1415-17 (9th Cir.1995) (recusal of the district court judge not required even though one of the judge's clerks, during an early stage of the case, subsequently became an associate of the firm that represented a party in the case, since law clerk did not work on that case); Holmberg v. Morrisette, 800 F.2d 205, 209 (8th Cir.1986) (court stated that district court appeared to have complied with recusal statute notwithstanding the trial judge's refusal to recuse himself from determining attorney fees because his son was an associate in the law firm representing one of the parties); Wilmington Towing Company, Inc. v. Cape Fear Towing Company, Inc., 624 F.Supp. 1210 (E.D.N.C.1986), cert. denied, 481 U.S 1028, 107 S.Ct. 1953, 95 L.Ed.2d 526 (1987) (recusal not required when judge's son had worked as a summer associate and tentatively accepted employment with the law firm representing plaintiff); Diversifoods, Inc. v. Diversifoods, Inc., 595 F.Supp. 133 (N.D.Ill. 1984) (recusal not required when judge's husband worked for firm representing defendant, but did not act as a lawyer in the pending case). And, in any event, at oral argument on October 30, 1996, the affiliation of Michael Gadola with Dickinson, Wright was fully disclosed, but both parties agreed and consented to the court's continued participation and also this court advised that if there were any questions relating thereto, the court was entirely willing to recuse himself. See Title 28 U.S.C. § 455(e) ("Where the ground for disqualification arises only under subsection (a), waiver may be accepted provided it is preceded by a full disclosure on the record of the basis for disqualification").

II. ANALYSIS

A. Summary Judgment

Under Rule 56(c) of the Federal Rules of Civil Procedure, summary judgment may be granted "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." "A fact is `material' and precludes grant of summary judgment if proof of that fact would have [the] effect of establishing or refuting one of the essential elements of the cause of action or defense asserted by the parties, and would necessarily affect [the] application of appropriate principle[s] of law to the rights and obligations of the parties." Kendall v. Hoover Co., 751 F.2d 171, 174 (6th Cir.1984) (citation omitted). The court must view the evidence in a light most...