Deas v. PACCAR, Inc.
| Decision Date | 14 November 1985 |
| Docket Number | No. 83-3182,83-3182 |
| Citation | 775 F.2d 1498 |
| Parties | James E. DEAS and Peterbilt of Florida, Inc., a Florida Corporation, Plaintiffs-Appellants, v. PACCAR, INC., a Delaware Corporation, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
John A. DeVault, III, Jacksonville, Fla., for plaintiffs-appellants.
Eli H. Subin, John M. Brennan, Subin, Shams, Rosenbluth & Moran, Orlando, Fla., for defendant-appellee.
Appeal from the United States District Court for the Middle District of Florida.
Before RONEY and CLARK, Circuit Judges, and SIMPSON, Senior Circuit Judge.
This is an appeal by James E. Deas (Deas) and Peterbilt of Florida, Inc. (P.O.F.) from an order granting PACCAR, Inc. (PACCAR) a new trial. Deas is the President and sole stockholder of P.O.F., formerly an exclusive Peterbilt truck dealer. PACCAR is the manufacturer of Peterbilt Trucks. One of PACCAR's divisions is Peterbilt Motors Company (Peterbilt).
Deas and P.O.F. filed this action against PACCAR, Inc. for: (1) violation of the Federal and Florida Dealer Day in Court Acts; (2) fraud with respect to the nondisclosure of facts regarding prospective loans, supplies of new trucks for resale, and P.O.F.'s status as a dealer; and (3) tortiously interfering with P.O.F.'s business relationships. P.O.F.'s claims based on the Federal and Florida Acts and Deas' claim of tortious interference with a prospective business relationship were the only claims submitted to the jury. The jury found that PACCAR, through its Peterbilt Motors Company Division, violated the Florida and Federal Acts and tortiously interfered with a prospective business relationship held by Deas.
PACCAR filed a motion for judgment notwithstanding the verdict (J.N.O.V.) and an alternative motion for a new trial. The district court, after a hearing, denied the motion for J.N.O.V. and granted PACCAR's alternative motion for a new trial. In its order, the court stated:
It is this Court's opinion that the admission of Dr. Westbrook's testimony (the expert who testified on behalf of plaintiff) as support for both liability and damages was in error in that it was completely speculative. Without such evidence the plaintiff could not have prevailed....
Deas and P.O.F. requested the court to enter a judgment notwithstanding the verdict so that an immediate appeal could be taken. The plaintiffs stated that they could not establish any better case on retrial and that they could not afford a retrial. They thus wanted to win or lose based on the record made at trial. The court granted the motion for judgment notwithstanding the verdict and PACCAR's alternative motion for a new trial. The procedural aspect of this appeal is discussed infra in Sec. II.
Deas and a co-partner purchased a truck dealership in Orlando in 1966. At that time, the company operated under a different name and was not an exclusive Peterbilt distributor.
In 1970, Deas became the president and sole stockholder of the company. With the permission of Peterbilt, Deas changed the dealership name to Peterbilt of Florida and thereafter sold Peterbilt Trucks exclusively. 1 The initial distributor's contract between Deas and Peterbilt was signed in February, 1971 and could be terminated by either party by giving thirty days notice.
In 1971 and 1972, Peterbilt encouraged Deas to sign a new distributor contract and to expand to other markets in Florida. Although Deas objected to certain provisions of the contract and to the plans for expansion, he eventually signed the new contract and in 1973 embarked on an expansion program which his accountant had advised was not prudent. The contract provided that additional facilities would be necessary when required and did not obligate Peterbilt to lend any financial support to P.O.F.
Deas testified that he believed that PACCAR would provide him with all of the trucks he needed and with financial assistance when he reluctantly agreed to expand. He related that he discussed the expansion efforts with PACCAR's General Manager and General Marketing Manager. They told him that it was necessary for him to expand his operation so the company could achieve greater market penetration. Deas responded that P.O.F. was centrally located, that he did not have the money for the proposed expansion, and that more trucks would be needed. According to Deas, they assured him that he would be able to obtain all of the trucks he needed and that he would receive assistance in financing. Record Vol. 1 at 194. Benny L. Bailey, PACCAR's Eastern Region Credit Manager, corroborated Deas' opinion about obtaining financial assistance during the expansion. Although he also indicated that Deas probably misunderstood the statements of PACCAR's representatives, he testified that Deas informed him that Deas had been offered financial assistance. Record, Vol. 24 at 1238. 2
Bailey convinced Deas to apply for wholesale financing from Associates Finance (Associates). 3 As a result, Deas and Associates entered into an agreement in which Associates extended wholesale financing so that P.O.F. could obtain its inventory. Record, Vol. 20 at 220-221. Deas did not receive any direct financial assistance from Peterbilt.
From 1971 to 1974 P.O.F. received outstanding performance awards from Peterbilt. However, P.O.F.'s subsequent financial performance was not as outstanding. P.O.F. had a negative net worth from 1975 to 1978. 4 Its accountant, Carson Eddy, testified that P.O.F.'s financial problems were the result of a lack of operating capital. Eddy also testified that P.O.F.'s accounting procedures were deficient; although, he did not feel they affected P.O.F.'s profits. 5
Eddy rendered his opinion about the causes of P.O.F.'s financial condition:
In 1974 and '75, I believe they had some problems with strikes at the factory which caused Mr. Deas not to have enough trucks available for sale. I think that was during 1970--I can't recall the exact date--I think it was '73 and '74 was the strike.
Right after that, they went on allocations, I believe, and weren't able--they weren't able to get enough trucks to sell and had too much overhead with all the branches.
....
[B]y using internal capital at the time for expansion, at the time that recession hit, they did not have internal funds available to carry on those operations; and therefore, had to go to outside short-term lending at very high interest rates at that time.
PACCAR's Eastern Region Credit Manager had a similar observation regarding the cause of P.O.F.'s financial problems:
In January, 1975 Deas contacted Joseph Dunn, the General Manager of the Peterbilt Division, because P.O.F.'s distributor's contract was near the date of expiration. On March 20, 1975, Dunn recommended that the contract be renewed for a three year term. Record, Vol. 24 at 1208. 6 Dunn left the position of General Manager in August, 1975 and was replaced by Ug Rohr.
When Rohr became General Manager he apparently brought with him a change of philosophy with regard to the renewal of distributor's contracts in general and P.O.F.'s contract in particular. 7 One employee observed that Rohr's policy was to eliminate all dealers who were not selling an adequate amount of trucks and who were having financial problems. Record, Vol. 24 at 1251-52. Under Rohr's administration, several memos regarding the Florida market and P.O.F.'s performance were generated. The memos directed employees to check on getting new dealers in Florida; suggested that Peterbilt might need to develop a plan to terminate amicably its relationship with P.O.F.; and advised Rohr to seek legal assistance in order to determine the documentation needed to support a cancellation of P.O.F.'s contract. 8 Deas stated that he was unaware of Peterbilt's concerns regarding P.O.F.'s performance.
Deas testified that he received the three-year renewal contract on February 19, 1976, one year after it had been approved. 9 However, the renewal contract was dated as being signed on December 15, 1975.
The 1975 distributor's contract provided that the distributor would "maintain a sales and service organization which will be adequate to develop the potential of his market area ..." and at "such time as sales show the requirement for additional facilities within the market area, the distributor will be expected to establish outlets in such locations." Plaintiff's Exhibit 68 at 1. The contract also required P.O.F. to invest "working capital and maintain lines of credit necessary to realize the full potential of [its] market area." Id. Peterbilt agreed to "use its best efforts to make shipments on or before the dates specified in orders accepted from the Distributor" but did not agree to be responsible "for failure to deliver goods on time or to fill orders where prevented by ... strike or labor disturbances ... or if the demand for goods [exceeded Peterbilt's] available supply...." Id. at 2.
Presumably, strikes and the increased demand for trucks caused Peterbilt to allocate trucks to its dealers from 1975-76 until 1977-78. 10 Deas was disturbed with his truck quotas because he felt they were insufficient to allow him to operate profitably. Peterbilt's Southeastern Sales Manager, however, testified that the allocation of trucks prevented all of the dealers in his region from obtaining the number of trucks ordered. 11
Deas testified that in January, 1978 he was forced to close one of his four facilities because he could not obtain sufficient equipment to make a profit. 12 Rohr responded to Deas' action by...
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