Ernst v. Ford Motor Co.

• Decision Date: 23 July 1991
• Docket Number: No. WD,WD
• Citation: 813 S.W.2d 910
• Parties: Gary ERNST, et al., Appellants, v. FORD MOTOR COMPANY, et al., Respondents. 43823.
• Court: Missouri Court of Appeals

Page 910

813 S.W.2d 910

Gary ERNST, et al., Appellants, v. FORD MOTOR COMPANY, et al., Respondents.

No. WD 43823.

Missouri Court of Appeals Western District.

July 23, 1991.

Duane J. Fox, Paul G. Schepers, Peter Griffith, Kansas City, J. Michael Dady, Joseph Thomson, and M.E. Alden, Minneapolis, Minn., for appellants.

Robert L. Driscoll, Kansas City and Mark Hinderks, Overland Park, Kan., for Ford.

J. Nick Badgerow, Overland Park, Kan., for Versatile.

Before ANTHONY P. NUGENT, Jr., Senior Judge, P.J., SHANGLER, GAITAN and FENNER, JJ.

ANTHONY P. NUGENT, Jr., Senior Judge.

Plaintiffs, former dealers of agricultural equipment and parts, appeal from the judgment of the circuit court entering summary judgment on all counts in favor of Ford Motor Company, Ford New Holland, Inc., and New Holland, Inc., (collectively referred to as "FNH"), and in favor of Versatile Farm Equipment Corporation ("VFEC") on Counts II, III, IV and VIII.

Versatile Corporation, a Canadian corporation ("Versatile"), engaged in the manufacture and sale of farm equipment. The unincorporated agricultural equipment division of Versatile manufactured Versatile branded equipment for VFEC, a Missouri corporation, for marketing through VFEC's dealers in the United States.

The plaintiffs, dealers from Missouri, Kansas, Minnesota and Wisconsin, entered into identical written dealership agreements with VFEC. Paragraph 21.3 of those agreements provided that: "This Agreement may be terminated by either party at any time after the date of its approval, with or without cause, by not less than 90 days written notice...."

In July, 1986, in response to financial problems, Versatile shut down its Winnipeg, Manitoba, facility which manufactured Versatile branded tractors. As Versatile's financial condition deteriorated, Versatile sought a purchaser for its agricultural equipment sales.

On March 23, 1987, to facilitate the reopening of Versatile's manufacturing facilities, FNH and Versatile entered into an interim operating agreement, pursuant to which FNH provided loan guaranties to Versatile. FNH and Versatile executed an asset purchase agreement on May 21, 1987, and the purchase closed on July 10, 1987. In the asset purchase agreement, FNH expressly excluded 150 dealers from the transaction.

In connection with the asset purchase, the Canadian government agreed to lend FNH $45.5 million (Cdn.), contingent upon delivery of the asset purchase agreement to the Canadian government and upon delivery of an approval. The government granted the approval after FNH disclosed its business plan would include retention of "the existing Canadian Versatile dealer network. This plan is not intended, however, to restrict the right of FNH or the Borrower to terminate specific Versatile dealers for non-performance or other valid business reasons or objectives." (Loan Agreement, § 4.1(g)).

On May 22, 1987, VFEC sent notice to each of the corporate plaintiffs (except Garden City Farm Equipment, Inc., and Dodge City Farm Equipment, Inc., which the records did not reflect as dealers on that date), informing them that the Versatile dealership agreement would be terminated in ninety days pursuant to paragraph 21.3 of their Versatile contract.

On July 27, 1987, in a letter to "Dealers Terminated by Versatile Corporation," FNH informed those dealers that the asset purchase had closed and that VFEC had assigned the receivables from the dealers to FNH and that all sums owed thereunder should be paid to FNH. The letter also stated that: "On behalf of Versatile Corporation, New Holland, Inc., has agreed to make wholegoods and service parts available to meet your resale needs until the effective date of your termination. All such sales will be made on a COD basis." VFEC terminated plaintiffs effective August 22, 1987. ¹

Plaintiffs brought this action claiming breach of contract (Count I), promissory and equitable estoppel (Count VI), unjust enrichment (Count VII), recoupment (Count IV), tortious interference (Count V), violation of Kansas and Wisconsin dealership statutes (Counts II and III), and breach of contract in which plaintiffs appear as third-party beneficiaries (Count VIII). The trial court granted summary judgment to FNH on all counts, and to VFEC on Counts II, III, IV and VIII.

We review a summary judgment as we would any court-tried or equity proceeding. If we can sustain the judgment under any theory, we must do so. McCready v. Southard, 671 S.W.2d 385, 387 (Mo.App.1984). If the trial court has reached a correct result for incorrect reasons, we still must affirm. Labor Discount Center, Inc. v. State Bank & Trust Co. of Wellston, 526 S.W.2d 407, 429 (Mo.App.1975). We review the entire record in the light most favorable to the party against whom the trial court entered judgment. Fisher v. Scott & Fetzer Co., 664 S.W.2d 662, 663 (Mo.App.1984).

A trial court must exercise great care in granting summary judgment, frequently referred to as "an extreme and drastic remedy." Gal v. Bishop, 674 S.W.2d 680, 682 (Mo.App.1984). It may enter a summary judgment where the pleadings, depositions and admissions on file, together with the affidavits, if any, show that no genuine issue of material fact exists and that the law entitles the moving party to a favorable judgment. Ronollo v. Jacobs, 775 S.W.2d 121, 125 (Mo.1989). ² A party opposing a proper motion for summary judgment may not rest upon mere allegations or denials, but to overcome the motion must set forth specific facts that demonstrate the existence of an outstanding genuine issue of material fact. St. Charles County v. Dardenne Realty Co., 771 S.W.2d 828, 830 (Mo.1989).

I.

As their first of seven points on appeal, plaintiffs contend that the trial court erred in granting FNH summary judgment on plaintiffs' breach of contract claim. They first argue that genuine issues of material fact exist as to whether FNH had become a party to an express or implied contract with plaintiffs.

Plaintiffs assert that FNH's actions in controlling and operating Versatile from the date of the interim operating agreement until the closing of the asset purchase agreement evidence a contract. They argue that under the interim operating agreement, FNH took a very active role in running Versatile. Although the interim operating agreement requires Versatile to obtain FNH's prior recommendations for various operational matters, FNH included this requirement to ensure that Versatile did not exceed funding limits imposed on Versatile. Furthermore, the interim operating agreement expressly provided that

[n]othing herein expressed or implied is intended or shall be construed to confer upon or give to any person ... firm or entity, other than the parties hereto and their respective successors and permitted assigns, any rights or remedies under or by reason of this Interim Operating Agreement. (Interim Operating Agreement, Para. 20(e)).

FNH also expressly disclaimed liabilities arising from Versatile's operations:

Except for the obligations expressly assumed by NH Canada hereunder, NH Canada is not hereunder assuming and shall not hereunder be responsible for any claim, lawsuit, liability, debt or obligation arising out of or related to the operation of [Versatile's] Farm Equipment Business. Id. Para. 15.

Plaintiffs offered no evidence to show that the interim operating agreement created an implied contract between plaintiffs and FNH.

Plaintiffs next argue that FNH's July 27, 1987, letter to plaintiffs established the terms for a dealership between FNH and plaintiffs. A court may infer the creation of a contract from the acts of the parties where they show a mutual intent to contract. Standard Monument Co. v. Mount Hope Cemetery & Mausoleum Co., 369 S.W.2d 876, 881 (Mo.App.1963). This letter, however, does not show an intent to enter into a continuing dealership agreement. It confirms the termination of plaintiffs' dealerships and shows FNH's agreement to accommodate Versatile and the terminated dealers by supplying goods and parts to dealers until their terminations became effective. The letter provides that the terminated dealers would receive products only on a COD basis, a condition consistent with terminating rather than beginning, a dealer-manufacturer relationship.

Even when viewed in the light most favorable to plaintiffs, the record does not establish an express or implied contractual relationship between plaintiffs and FNH by virtue of the letter or the interim operating agreement. Without proof of an existing contract, FNH cannot be held liable for breach of contract.

Plaintiffs also argue that, as successors to Versatile, FNH became liable for VFEC's breach of contract. Generally, a corporation that purchases the assets of another corporation does not become liable for the debts and liabilities of the corporation whose assets it purchases. Brockmann v. O'Neill, 565 S.W.2d 796, 798 (Mo.App.1978). This general rule of nonliability has four exceptions: (1) where the purchaser expressly or impliedly agrees to assume such debts; (2) where the transaction amounts to a consolidation or merger of the corporation; (3) where the purchasing corporation constitutes a mere continuation of the selling corporation; or (4) where the transaction fraudulently attempts to escape liability for such debts. Id. Plaintiffs argue that genuine issues of fact exist as to whether the first two exceptions apply.

Plaintiffs cite Groseth Int'l, Inc. v. Tenneco, Inc., 410 N.W.2d 159 (S.D.1987), to illustrate the applicability of the implied assumption theory. The facts of Groseth clearly distinguish it from this case. In Groseth, the purchase agreement required the purchaser, not the seller, to negotiate terminations with the dealer. Id. at 170. The South Dakota Supreme Court refused to allow the purchaser to exclude dealer agreements from the assets purchased because the agreement expressly provided that the purchaser assume obligations relating to...