Durkee v. Goodyear Tire & Rubber Co., 87-C-5-S.

• Decision Date: 22 May 1987
• Docket Number: No. 87-C-5-S.,87-C-5-S.
• Citation: 676 F. Supp. 189
• Parties: Stuart DURKEE and Mark Becker, individually and as partners d/b/a Cedar Car Care, Plaintiffs, v. The GOODYEAR TIRE & RUBBER COMPANY, an Ohio corporation, and Mathisen Tire, Defendants.
• Court: U.S. District Court — Western District of Wisconsin

676 F. Supp. 189

Stuart DURKEE and Mark Becker, individually and as partners d/b/a Cedar Car Care, Plaintiffs, v. The GOODYEAR TIRE & RUBBER COMPANY, an Ohio corporation, and Mathisen Tire, Defendants.

No. 87-C-5-S.

United States District Court, W.D. Wisconsin.

May 22, 1987.

Edward R. Brunner, Brunner & Sykes, Rice Lake, Wis., for plaintiffs.

William M. Conley, Foley & Lardner, Madison, Wis., for defendants.

MEMORANDUM AND ORDER

SHABAZ, District Judge.

Before the Court is the motion of defendant Goodyear Tire & Rubber for summary judgment on each count of the plaintiffs' three count complaint arising from the contractual relationship between the parties. By order dated February 16, 1987, the Court determined that the complaint stated no claim for relief (nor was there any possible claim that could be made) against defendant Mathisen Tire. Accordingly, the case had been properly removed to this Court from the Circuit Court of Barron County. The plaintiffs were of diverse citizenship from the only proper defendant, and the amount in controversy exceeded $10,000. The jurisdiction of this Court has been properly invoked.

FACTS

Plaintiffs Stuart Durkee and Mark Becker are Wisconsin residents engaged in the sale of automobile and truck tires and doing business as Cedar Car Care. The Goodyear Tire and Rubber Company is an Ohio corporation and manufactures and markets automobile and truck tires.

On October 3, 1984, Durkee and Blake Marsh, Becker's predecessor in the Cedar Car Care partnership, entered into a dealer contract with Goodyear, establishing Cedar Car Care as a dealer in Goodyear products. The contract, in pertinent part, stated as follows:

1. Goodyear hereby appoints Dealer a non-exclusive Contract Dealer in such Goodyear products and merchandise indicated in Paragraph 2 hereof, hereinafter collectively referred to as "Products," as shall be made available by Goodyear from time to time to its Contract Dealers generally. Goodyear agrees to sell Products to Dealer for resale except that Goodyear shall not be required to sell to Dealer a Product or Products the sale of which to Contract Dealers generally has been discontinued by Goodyear. Goodyear retains the right to sell to other customers in Dealer's trade area and elsewhere.

* * * * * *

14. ... This Contract shall supersede any other Dealer Agreement and/or any other sales agreement now in effect between the parties concerning the sale by Goodyear to Dealer of any Product covered hereby. This Contract expresses completely the obligations and promises of both parties and no other obligations or promises by either party are to be inferred by reference to any other oral or written statements by the parties or their representatives.

Goodyear's representative in the formation of the relationship between the parties was Phil Heimbach. For purposes of this motion only, it is assumed that Heimbach represented to Durkee that Cedar Car Care's dealership in the Rice Lake, Wisconsin area would be exclusive for a period of five years; that Cedar Car Care would be given the first opportunity to open additional dealerships in the area and would be consulted before Goodyear contracted with any other dealers. Against plaintiffs' wishes, Goodyear entered into a dealership contract with Mathisen Tire in Rice Lake, Wisconsin, in November 1986.

MEMORANDUM

It is plaintiffs' claim that Heimbach's promise of exclusivity in the dealership arrangement between Cedar Car Care and Goodyear was breached when Goodyear entered into a contract with Mathisen (Count I); that Goodyear fraudulently induced the plaintiffs to enter into the contract by virtue of Heimbach's promise (Count II); and that, under a theory of promissory estoppel, Heimbach's promise of exclusivity should be enforced (Count III).

Goodyear bases its motion for summary judgment on the proposition that, even if Heimbach promised the plaintiffs an exclusive arrangement, the contract language expressly contradicts such a promise and the parol evidence rule denies their claims.

It is, of course, obvious that plaintiffs cannot establish liability if the evidence of Heimbach's promise is excluded by the parol evidence rule. Plaintiffs were granted a "non-exclusive" dealership in Goodyear products. The parol evidence rule, which is a rule of substantive law and not a rule of evidence, In Re Spring Valley Meats, Inc., 94 Wis.2d 600, 288 N.W.2d 852, 855 (1980), is as follows:

When the parties to a contract embody their agreement in writing and intend the writing to be the final expression of their agreement, the terms of the writing may not be varied or contradicted by evidence of any prior written or oral agreement in the absence of fraud, duress, or mutual mistake.

Id. Leaving aside questions of fraud, duress or mutual mistake for a moment, it is well settled that parol evidence is admissible on the question of "whether the parties intended to assent to the writing as the final and complete (or partial) statement of their agreement." Federal Deposit Insurance Corp. v. First Mortgage Investors, 76 Wis.2d 151, 250 N.W.2d 362, 366 (1977).

Plaintiffs' reliance on this latter principle to defeat the defendant's motion is unwarranted. At least three corollary principles apply in this situation. First, the rule relied upon by plaintiffs is "subject to the limitation that such parol evidence does not conflict with the part of an assertedly partial integration that has been integrated in writing. Id. 250 N.W.2d at 366, citing Morn v. Schalk, 14 Wis.2d 307, 111 N.W.2d 80, 84 (1961) The issue to which plaintiffs wish to offer parol evidence — the question of exclusivity — is one which is directly addressed by the written contract. Second, evidence of prior agreements which relate to the same subject matter as the agreement in question, "is not admissible when the written agreement embodies written terms excluding additional understandings or agreements not contained in the writing, i.e., `merger' clauses." Spring Valley, 288 N.W.2d at 855. The contract in question here contains a clear and comprehensive merger clause at paragraph 14, "which expressly negatives collateral or antecedent understandings. Id., at 855-56. Third, it has been repeatedly held, as Justice Robert Hansen pointed out in Production Credit Association of Green Bay v. Rosner, 78 Wis.2d 543, 255 N.W.2d 79, 81 (1977), that oral testimony is admissible only when it "clarifies an existing ambiguity and it cannot establish an understanding in variance with the terms of the written document." There is simply nothing ambiguous about the language appointing the plaintiffs as a "non-exclusive" dealer, and plaintiffs do not contend otherwise.

These same principles undercut plaintiffs' promissory estoppel theory. This doctrine, which was adopted in Hoffman v. Red Owl Stores, Inc., 26 Wis.2d 683, 133 N.W.2d 267 (1965), provides that a promise may be specifically enforced, or subject the promisor to damages. (Id. 133 N.W.2d at 275, n. 2):

(1) when that promise is one which the promisor should reasonably expect to induce action or forebearance of a definite and substantial character on the part of the promisee, (2) when the promise does induce such action or forebearance, and (3) when injustice can be avoided only by enforcement of the promise.

Kinn v. Coast Catamaran Corp., 582 F.Supp. 682, 687 (E.D.Wis.1984). While the first two considerations arguably present factual issues in this case, the third requirement is one which involves a policy decision, embracing an element of discretion, for the Court alone. Hoffman, 133 N.W.2d at 275. Both Judge Reynolds in Kinn, and Judge Warren in Wojciechowski v. Amoco Oil Co., 483 F.Supp. 109 (E.D. Wis.1980), held that the principles underlying the parol evidence rule required the exercise of such discretion against plaintiffs in cases virtually on point with this one.

This Court agrees with their conclusions. In Hoffman, the plaintiff had made substantial expenditures with the understanding that, if he did so, the defendant would grant him a franchise. The doctrine of promissory estoppel was adopted because the requisites of a contract between the parties did not exist. After all, there would be no need for the doctrine if an action for breach or specific performance of a contract could be brought. The rationale for the doctrine simply disappears when the parties finally enter into a contract. If the doctrine can be applied as an alternative to a breach of contract action which is barred by the parol evidence rule, then the parol evidence rule would be nugatory. The rule's justification or purpose is that:

When the parties have discussed and agreed upon their obligations to each other and reduced those terms to writing, the writing, if clear and unambiguous, furnishes better and more definite evidence of what was undertaken by each party than the memory of man, and applies to exclude extrinsic utterances when it is sought to use those utterances for the purpose for which the writing was made, such writing superseding them as the legal act.... No other language is admissible to show what the parties meant or intended, for the reason that each has made the instrument the agreed test of his meaning and intention.

30 Am.Jr.2d Evidence, § 1016, pp. 151-52 (1967) (footnotes omitted). Thus, the purpose of the rule is to bind the parties to the agreement that they executed in writing. To entertain a theory of recovery that makes a prior, inconsistent promise enforceable is to write the rule out of existence. Plaintiffs' attempt to fit their case into the Hoffman mold by asserting that they made expenditures related to the premises in which they did business before the contract was signed and after they were led to believe that they would have an exclusive dealership. However, this assertion is factually flimsy as plaintiff Durkee already had made a down payment on the property before there were any discussions concerning the...