Ed Houser Enterprises, Inc. v. General Motors Corp., 78-1012

• Decision Date: 21 December 1978
• Docket Number: No. 78-1012,78-1012
• Citation: 595 F.2d 366
• Parties: , 1979-1 Trade Cases 62,505 ED HOUSER ENTERPRISES, INC., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 366

595 F.2d 366

54 A.L.R.Fed. 304, 1979-1 Trade Cases 62,505

ED HOUSER ENTERPRISES, INC., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, Defendant-Appellee.

No. 78-1012.

United States Court of Appeals, Seventh Circuit.

Argued Sept. 15, 1978.

Decided Dec. 21, 1978. ^*

March 28, 1979.

Richard N. Molchan, Peoria, Ill., for plaintiff-appellant.

Leslie D. Locke, Chicago, Ill., for defendant-appellee.

Before SPRECHER, BAUER, and WOOD, Circuit Judges.

PER CURIAM.

The plaintiff-appellant, Ed Houser Enterprises, Inc., appeals from the district court orders granting summary judgment in favor of the defendant-appellee, General Motors Corporation, as to Count I of its complaint, and further denying the plaintiff's motions for reconsideration. Plaintiff also appeals from the judgment entered on the jury verdict in favor of the defendant as to Count II of its complaint. The appellant presents numerous issues for review in its appeal, which may be summarized as follows:

(1) whether a genuine issue of material fact was raised in Count I of the complaint on the question of whether the defendant violated the "Automobile Dealers' Day in Court Act", 15 U.S.C. § 1221 Et seq.;

(2) whether the jury verdict on Count II in favor of the defendant was against the manifest weight of the evidence; and

(3) whether the court committed reversible error during the trial of Count II of the complaint by certain of its instructions to the jury, and by allowing certain of the defendant's witnesses to testify, and by admitting into evidence certain of the defendant's exhibits.

We are not persuaded by the arguments advanced in support of these contentions, and accordingly, we affirm the judgments appealed from for the reasons set forth below.

I.

Plaintiff, Ed Houser Enterprises, Inc., was a franchised dealer of Chevrolet automobiles and trucks in Peoria, Illinois, from June, 1970 to May, 1973. In February, 1975, the plaintiff filed its complaint in two counts against the defendant, General Motors Corporation (hereinafter "GM"), seeking damages for the defendant's alleged failures to perform certain terms and provisions of the written automobile dealer franchise agreement in force between the parties during the period of the plaintiff's franchise. Count I of the complaint alleged that the defendant violated the "Automobile Dealers' Day in Court Act", 15 U.S.C. §§ 1221-1225 (hereinafter "Dealer Act"), due to the failure of the defendant to act in good faith in performing or complying with the terms and provisions of the franchise dealer contracts. Count II of the complaint alleged that the defendant committed a breach of contract by failing to perform or to comply with the terms and provisions of the franchise contracts.

In December, 1975, the defendant moved for a partial summary judgment as to Count I of the complaint. Following a hearing on the defendant's motion, the district court granted summary judgment for the defendant on Count I, holding that the plaintiff had failed, as required under Rule 56(e) of the Federal Rules of Civil Procedure, to set forth specific facts raising a genuine issue that it had been coerced, threatened, or intimidated by the defendant. Further, the court held there were no facts showing any coercion in respect of the defendant's alleged practice of discriminatory distribution. The court also held that the uncontroverted facts plainly refuted the allegation that the plaintiff was threatened or coerced to build new facilities or to sell its dealership. The plaintiff's motions for reconsideration on the judgment rendered on Count I of its complaint were subsequently denied by the court.

In September, 1977, the plaintiff's breach of contract claims under Count II of its complaint were litigated at a jury trial. Following a three week trial, the jury returned a verdict in favor of the defendant as to Count II. The plaintiff's motion for a new trial was denied.

II.

The appellant first challenges the district court's order granting summary judgment in favor of the defendant as to Count I of its complaint. It is settled that the standard of appellate review of a summary judgment order is the same as that applied by the trial court under Rule 56: whether the plaintiff presented a genuine issue of fact. See, e. g., United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176 (1962). The appellant contends that it met its burden in this regard alleging there is sufficient evidence in the record creating a genuine issue of material fact that GM's conduct violated the Dealer Act. We disagree.

The Dealer Act provides automobiles dealers with a cause of action for treble damages caused by a manufacturer's failure to act in "good faith" in performing or complying with the terms of a written franchise agreement, or in terminating, canceling, or not renewing the franchise. The Act defines "good faith" as follows:

"The term 'good faith' shall mean the duty of each party to any franchise, and all officers, employees, or agents thereof to act in a fair and equitable manner toward each other so as to guarantee the one party freedom from coercion, intimidation, or threats of coercion or intimidation from the other party: Provided, That recommendation, endorsement, exposition, persuasion, urging or argument shall not be deemed to constitute a lack of good faith." 15 U.S.C. § 1221(e).

Thus, an indispensable element of a cause of action under the Dealer Act is a lack of good faith in which coercion, intimidation, and threats thereof exist. This court has so held. Lawrence Chrysler Plymouth, Inc. v. Chrysler Corp., 461 F.2d 608 (7th Cir. 1972), Cert. denied, 409 U.S. 981, 93 S.Ct. 317, 34 L.Ed.2d 245 (1972). Therefore, in order to succeed under this section of the Act, the plaintiff must allege facts showing coercion.

To meet its burden, the appellant asserts three types of action or threatened coercive conduct by GM in violation of the Act. First, the appellant argues that GM threatened non-renewal of the franchise agreement to coerce the appellant to construct new facilities. Second, the appellant contends, although not before the district court, that GM curtailed the appellant's allocation of vehicles as a sanction for failure to construct new facilities. Third, the appellant argues that the combination of GM's alleged bad faith acts in performing the franchise agreement constituted a coercive course of conduct.

The appellant's contention that GM threatened non-renewal of the franchise to coerce the appellant to construct new facilities is not substantiated on the record. The appellant was advised prior to entering into the franchise agreement that the defendant would not renew the agreement unless new dealership facilities were built. Among the reasons for the appellant's request for a longer term contract than ordinary (i. e., five years), was its recognition, in a letter to the defendant's zone manager, that such time would enable it to liquidate certain indebtedness incurred in connection with acquiring the company from the previous owner, "before embarking on a program of facility expansion or improvement of the present facilities to our mutual benefit", (Supp.App., 230-231). It is also apparent from the record that Mr. Houser, as an officer of the former franchisee, was quite aware of the long-standing concern expressed by the defendant's management during the former franchisee's ownership over the conditions of the dealership's physical facilities which the plaintiff planned to occupy. Thus, pursuant to the recommendation of the Peoria zone manager, GM, in a letter to the plaintiff dated May 14, 1970, granted the request for a new five-year term Selling Agreement with the express understanding that a renewal of the agreement would not be given unless positive and definite action had been taken toward the construction of new and adequate under-roof facilities. A new Selling Agreement, in consideration of this express condition, was executed by the parties on June 5, 1970.

On appeal, the appellant challenges the validity of this condition, claiming that a subsequent Dealer Selling Agreement, executed on November 1, 1970, superseded the June 5, 1970 agreement. The appellant concedes that renewal of the June agreement was conditioned upon modernization of its dealership facilities, but argues that the November agreement was not conditioned upon such a requirement. In support of its position, the appellant acknowledges that the basis of the June agreement was GM's letter of May 14, 1970, in which the requirement of modernization was established as a condition for renewal. But it contends that the basis for the November agreement was expressed in a June 30, 1970 letter from GM to its dealers, which only required the appellant to meet the space guides established by GM, and therefore, renewal of the November agreement was not conditioned upon the requirement of modernization.

However, this contention ignores the fact that the June agreement expressly contemplated that it was a temporary measure, to be substituted by a new form of agreement being prepared at the Chevrolet Motor Division for execution on November 1, 1970. Further, the June 30, 1970 letter plaintiff received from GM was a version of a form letter sent to all Chevrolet dealers in the Peoria zone, advising them that the new form of agreement would be presented and explained in a series of meetings prior to November 1, 1970. The version of the letter plaintiff received was addressed to dealers whose facilities did meet the established space guides required by the franchise agreement. Thus, the June letter was concerned with the size of plaintiff's facilities. It did not deal with the plaintiff's need for modernization or the defendant's terms for renewal. There is no other evidence in the...