Daimlerchrysler Motors Co. v. Manuel

• Decision Date: 24 February 2012
• Docket Number: No. 02–07–00299–CV.,02–07–00299–CV.
• Citation: 362 S.W.3d 160
• Parties: DAIMLERCHRYSLER MOTORS COMPANY, LLC, Appellant and Appellee, v. Tommy J. MANUEL, Tommy Manuel Auto Leasing, Inc., and Manuel Auto Sales, Ltd., Appellees and Appellants.
• Court: Texas Court of Appeals

362 S.W.3d 160

DAIMLERCHRYSLER MOTORS COMPANY, LLC, Appellant and Appellee,

v.Tommy J. MANUEL, Tommy Manuel Auto Leasing, Inc., and Manuel Auto Sales, Ltd., Appellees and Appellants.

No. 02–07–00299–CV.

Court of Appeals of Texas, Fort Worth.

Feb. 24, 2012.

Richard H. Gateley, Brackett & Ellis, P.C., Fort Worth, TX, for Appellant.

George C. Haratsis, Brittani W. Rollen, McDonald Sanders, P.C., Fort Worth, TX, for Appellee.

PANEL: GARDNER and WALKER, JJ.; and DIXON W. HOLMAN (Senior Justice, Retired, Sitting by Assignment).

OPINION

ANNE GARDNER, Justice.

I. INTRODUCTION

Following a bench trial in this breach of contract case, the trial court rendered judgment for damages against Appellant and Cross–Appellee DaimlerChrysler Motors Company, LLC (Chrysler) and in favor of Appellees and Cross–Appellants Tommy J. Manuel, Tommy Manuel Auto Leasing, Inc., and Manuel Auto Sales, Ltd. (collectively, Manuel) but denied recovery of Manuel's attorney's fees.¹ In four issues, Chrysler contends (1) that the best efforts provision in its contract with Manuel is unenforceable or that Chrysler conclusively proved that it complied with the best efforts provision by ultimately settling a protest by a competing dealer of Manuel's application for a new dealership, (2) that Manuel's damages from delay in opening the new dealership are consequential damages barred by limitation-of-damages provisions in the parties' contracts, (3) that the trial court abused its discretion by admitting unreliable expert testimony regarding damages for lost profits, and (4) that the trial court erred in calculating prejudgment interest. In his cross-appeal, Manuel contends that the trial court erred by failing to award him any trial and appellate attorney's fees. We affirm in part and reverse and remand in part.

II. BACKGROUND ²

Chrysler manufactures Chrysler, Dodge, Dodge Truck, and Jeep motor vehicles. Tommy Manuel has been a franchised automobile dealer in the Dallas–Fort Worth area for forty-seven years, including twenty-five years as a franchised Chrysler and Dodge dealer in Fort Worth and Richardson. At the time of trial, Tommy Manuel owned or controlled at least nine motor vehicle dealerships in the Dallas–Fort Worth market.

A. Historical Backdrop

In the mid–1990s, as number three of the “Big Three” in that day, Chrysler developed a market realignment plan called “Project 2000” to reorganize, relocate, and establish more motor vehicle dealerships to improve sales in the Dallas–Fort Worth area and to better compete with its rivals, Ford and General Motors. As an essential part of Project 2000, Chrysler sought to have its various Dallas–Fort Worth franchised dealers agree to waive their rights to protest the establishment or relocation of other dealerships in the Dallas–Fort Worth area.

Texas and other states closely regulate the distribution and sale of automobiles. In response to the superiority of economic power and bargaining strength of American automobile manufacturers in their relationships with dealers that had developed by the 1950s, with dealers completely dependent upon those manufacturers for their supply of automobiles, Congress ³ and state legislatures enacted regulatory schemes to protect retail dealers from perceived abusive and oppressive acts by the manufacturers.⁴ In accord with the policy of protecting dealers and consumers, the United States Supreme Court upheld the constitutionality of a California statute that prohibited manufacturers from relocating or adding new dealerships to their market areas where the effect of such added competition would be injurious to existing franchisees and to the public interest.⁵ The Court held that a state may, consistent with due process, provide that the filing of a protest by an existing dealer can, without a prior hearing, prevent another dealer from relocating or establishing a new dealership in the existing dealer's defined market area until after a hearing and resolution of the protest.⁶

The Texas Motor Vehicle Commission Code (TMVC), this State's first regulation of the motor vehicle manufacturer-dealer relationship, was adopted in 1971.⁷ The policy of the TMVC, set forth in what is now section 2301.001 of the occupations code, is to ensure a sound system of distribution and sale of motor vehicles for the protection of the public interest and welfare of the citizens of Texas through exercise of this State's police power.⁸

The TMVC, as do similar state statutory schemes like California's, provides a procedure by which an existing dealer may protest the establishment or relocation of a dealership that will sell the same line or make of vehicles in the same county or within fifteen miles of the existing dealership.⁹ The filing of a notice of protest triggers an administrative proceeding requiring a hearing before the Commission, in which the applicant for the new dealership has the burden to establish “good cause” for establishing or relocating the dealership at the proposed location.¹⁰ In the meantime, filing of the notice effects an immediate statutory stay as to any action by the applicant to establish or relocate the proposed new dealership or relocation until the protest is resolved.¹¹ Among its findings of fact, the trial court found that a hearing and final resolution of the protest could take years. Complicating matters in this case, the TMVC provides that any agreement waiving terms of the TMVC is void and unenforceable.¹²

B. Project 2000

By mid-July of 1999, after several years of efforts to obtain agreements for the realignment of the Dallas–Fort Worth market from its various dealers in the area, Chrysler had circulated and obtained settlement agreements, including waivers of the right to protest, from each of the Dallas–Fort Worth area dealers participating in Project 2000, with the exception of Manuel. Manuel was aware of Chrysler's plan but was not originally a Project 2000 participant for several reasons. Chrysler had litigation pending against one of Manuel's dealerships (and other dealerships in Texas and California) for allegedly seeking fraudulent warranty credits from Chrysler for engine cores (the Cores litigation), and Manuel had a protest against Chrysler pending before the Commission arising out of the Cores litigation. Additionally, Manuel had bought and operated for twenty-five years a successful dealership in Richardson with a “trip,” that is, three lines—Chrysler, Dodge car, and Dodge truck. Chrysler had been trying to buy the Chrysler line from Manuel for many years, and he had refused to sell it. Chrysler desired the Chrysler line to keep Manuel from protesting other dealers in that market area as well as to give that “point” to another dealer to complete the Project 2000 market realignment. Chrysler approached Manuel last regarding Project 2000 because it knew that Manuel would be the most expensive to deal with. Joe Park, Chrysler's Dallas zone manager at the time, recalled at trial, “We had to get him out of the way.”

In mid-August 1999, during a meeting of Dodge truck dealers in San Antonio, Chrysler representatives from Detroit and the Dallas zone office met with Manuel about joining Project 2000, and the parties proceeded to negotiate. Chrysler offered Manuel $5 million for his Chrysler line at the Richardson dealership, and Manuel bargained for $15 million and another dealership to replace it. The parties discussed possible locations for an additional dealership, and Park told Manuel that the other dealers had signed waivers of the right to protest relocations or additional dealerships in joining Project 2000. By the end of August 1999, the two parties had arrived at a comprehensive agreement.

C. The Agreements

Manuel signed two written agreements dated August 31, 1999, after reviewing them with his attorney (who had represented him in the Cores litigation). One was a settlement and release agreement (the Settlement Agreement) similar to those entered into with the other dealers participating in Project 2000. Pursuant to the Settlement Agreement, Chrysler paid Manuel $15.34 million to settle the Cores litigation, to relinquish the Chrysler line at his Richardson dealership, and to waive any right to protest the other dealers involved in Project 2000. The second agreement, attached to and referenced in the Settlement Agreement, was titled “Agreement to Enter into Sales and Service Agreement” (the AESSA). By the AESSA, Chrysler agreed to enter into a franchise agreement with Manuel for a new Chrysler–Jeep dealership in South Arlington (the South Arlington dealership), conditioned upon Manuel providing the land, building the facility, and furnishing the capital investment for the new dealership by January 1, 2001.

The Settlement Agreement stated that the South Arlington dealership was “subject to the possibility that it may be protested” by another dealer and that a protest “can significantly delay the establishment or relocation of the dealership subject to the protest.” The AESSA in turn provided that, in the event of a protest against the South Arlington dealership, Chrysler would “use its best efforts to litigate or settle the protest or lawsuit in order to allow the establishment of [the South Arlington] dealership.”

Pursuant to the terms of the Settlement Agreement, Manuel ceased selling Chrysler vehicles at his Richardson dealership within thirty days after the agreements were signed in August 1999. As required by the AESSA, Manuel created a new corporation (Tommy Manuel Chrysler–Jeep, Inc.) and filed his application with the Commission for the new dealership in South Arlington in December, which was approved on January 14, 2000. Manuel purchased property for the South Arlington dealership in April 2000.

D. Meador's Protest

On January 28, 2000, Meador Chrysler–Plymouth, Inc. (Meador), one of the other dealerships that was part of Project 2000 and whose dealer-principal had signed a protest waiver, filed a notice of protest...