Fca U.S. LLC v. Dunlap
| Decision Date | 27 June 2016 |
| Docket Number | Docket No.: BCD-AP-15-03 |
| Court | Superior Court of Maine |
| Parties | FCA US LLC, f/k/a CHRYSLER GROUP, LLC, Petitioner, v. MATTHEW DUNLAP, in his capacity as Secretary of State of the State of Maine, & DARLING's, Respondents. |
STATE OF MAINE
CUMBERLAND, ss
BUSINESS AND CONSUMER COURT
Location: Portland
ORDER ON PETITIONER'S M.R. Civ. P. 80C APPEAL
FCA US LLC, formerly known as Chrysler Group and hereinafter referred to as "Chrysler," appeals from the decision of the Maine Motor Vehicle Franchise Board (the "Board") dated April 4, 2014 (the "Decision") as to Counts I, II, and III of the Complaint filed by Respondent Darling's.1 Counts I and II of the Complaint allege that Chrysler violated 10 M.R.S. § 1176 of the Dealers Act by failing to timely pay Darling's average percentage markup on its reimbursement for warranty repairs performed after October 27, 2012. Count III alleges that Chrysler violated Section 1176 of the Business Practices Between Motor Vehicle Manufacturers, Distributors and Dealers Act ("Dealers Act") by failing to pay Darling's its average percentage markup on "exchange parts" used in warranty repairs since January 30, 2009. Count III also seeks a declaration that Section 1176 requires Chrysler to continue to pay that markup on those parts. For the reasons discussed below the Court grants in part and denies in part Chrysler's appeal.
Darling's sells new and used motor vehicles and is a franchisee of Chrysler operating under Sales and Service Agreements with Chrysler (the "Dealer Agreements"). (See R. 2721-2828.) Chrysler is a manufacturer of new motor vehicles and is a franchisor of Darling's. (See id.) As a Chrysler dealer, Darling's performs repairs on Chrysler vehicles pursuant to Chrysler warranties and its franchise with Chrysler. (R. 1600, 2780, 2797, 2814.) Because the repairs are covered by Chrysler warranties, the customer does not pay for the repairs. (See, e.g., R. 2914.) Instead, Chrysler is required to reimburse Darling's for the warranty repairs it performs on Chrysler's behalf. (Id.) This includes reimbursement for both the labor associated with the repair and the parts used in the repair. (Id.)
On January 30, 2013, Darling's filed its four count Complaint against Chrysler with the Board. (R. 1-15.) Following hearings and argument submitted by the parties, the Board issued the Decision on April 4, 2014. On that same date, the Board issued an Order on Darling's request for attorney fees and costs. (R. 2714-2717.) Thereafter, both Chrysler and Darling's appealed portions of the Decision to the Superior Court. After briefing, the Court heard oral argument on the parties' respective appeals on July 17, 2015. On that date, the Court was informed that Darling's Auto Mall v. General Motors, LLC, PEN-15-82 was pending before the Law Court. The Court reviewed the briefing in that matter and determined that it was likely to be dispositive of the issues raised in Darling's appeal and potentially instructive as to Chrysler's appeal regarding exchange parts under Count III. As a result, the Court determined that it would await the Law Court's decision in Darling's Auto Mall before issuing a decision on the merits in the present case.
On March 31, 2016, the Law Court issued Darling's Auto Mall v. GM LLC, 2016 ME 48, ___ A.3d ___. On April 6, 2016, Darling's withdrew its appeal in light of that decision. On May 3, 2016, the Court held oral argument in this matter and another matter involving the same parties, FCA US LLC v. Darling's, BCD-AP-16-03. At oral argument, the parties confirmed that they did not wish to submit supplemental briefing in light of Darling's Auto Mall and that the present matter was ready for adjudication.2
When reviewing final agency action pursuant to M,R. Civ. P. 80C, the Court reviews that decision for abuse of discretion, errors of law or findings not supported by the evidence. Centamore v. Dep't of Human Services, 664 A.2d 369, 370 (Me. 1995). "An administrative decision will be sustained if, on the basis of the entire record before it, the agency could have fairly and reasonably found the facts as it did." Seider v. Bd. of Examiner's of Psychologists, 2000 ME 206, ¶ 9, 762 A.2d 551. The Court's review is limited to "determining whether the agency's conclusions are unreasonable, unjust or unlawful in light of the record." Imagineering v. Sup't of Insurance, 593 A.2d 1050, 1053 (Me. 1991). The focus on appeal is not whether the court would have reached the same conclusion as the agency, but whether the record contains competent and substantial evidence that supports the result reached by the agency. See id.
Furthermore, when the claimed error involves the interpretation of a statute, the Court reviews the Board's interpretation de novo. See Ford Motor Co. v. Darling's, 2014 ME 7, ¶ 15, 86 A.3d 35, However, "[w]hen the dispute involves an agency's interpretation of a statute administered by it, the agency's interpretation, although not conclusive, is entitled to great deference and will be upheld unless the statute plainly compels a contrary result." Wood v.Superintendent of Ins., 638 A.2d 67, 70 (Me. 1994) (quotation omitted). If the statute is ambiguous, the Court reviews whether the agency's construction is reasonable. Guilford Transp. Indus. v. Pub. Utils. Comm'n, 2000 ME 31, ¶ 11, 746 A.2d 910 (citation omitted).
Prior to October 27, 2012, Chrysler reimbursed Darling's for parts used in warranty work at cost plus an 85% markup. (R. 2707, ¶ 2.) On September 27, 2012, Darling's submitted two average percentage parts markup declarations to Chrysler. (R. 2708, ¶ 4.) The submissions declared Darling's average percentage parts markup as 131% for its Ellsworth location and 113% for Augusta. (Id.) The Board found that Darling's submissions identified 398 consecutive repair orders for its Ellsworth location and 628 for Augusta. (Id. at ¶ 5.) Darling's entered the repair orders individually onto a spreadsheet and then identified the "100 sequential nonwarranty customer-paid service repair orders" (the "100 sequential orders") within each group that it used to establish its average percentage markups. (Id.) Darling's then sent copies of the 100 sequential orders selected to Chrysler. (Id.) Each set of 100 sequential orders included orders containing state inspections, routine maintenance, and accessories, but these repair orders were not used in calculating the average percentage markups. (Id. at ¶ 6; 3241-3622; 1821.)
Chrysler notified Darling's that it did not consider its submissions sufficient under Section 1176 on October 17, 2012 "because of the lack of sequential repair orders." (R. 2709, ¶ 7.) Chrysler asked Darling's to submit copies of all the repair orders that it had not. supplied, but listed on the spreadsheet. (Id.) Darling's refused to do so. (Id.) "When other Maine dealers had established markups with Chrysler after 2003, they had supplied copies of all the repair orders referenced in their submissions." (Id.)
On November 29, 2012, Chrysler changed its position to the one sought by Darling's and began paying a markup of 131% for Darling's Ellsworth and Augusta dealerships. (Id. at ¶ 10.) Chrysler also paid the 131% markup on parts Darling's purchased for warranty repairs between October 27, 2012 and November 28, 2012. (Id.) Chrysler further paid the amount claimed due by Darling's in Count II for Ellsworth warranty repairs it had not reimbursed at the 131% markup. (Id. at ¶ 11.) Darling's reached its average percentage parts markup by calculating the average markup on each part and then averaging the averages. (Id. at ¶ 12.) Chrysler argued that this computation was not consistent with Section 1176, but did not seek to lower Darling's markup in the underlying Board action. (Id.)
The Board determined that Section 1176 does not require the submission of 100 sequential nonwarranty customer-paid service repair orders to be "consecutive" because "such repair orders are simply not generated by a dealer consecutively." (R. 2710, ¶ 23.) The Board also explained that Section 1176 does not require the dealer to submit each one of the larger groups of consecutive repair orders from which it drew the 100 sequential orders. (Id.)
Furthermore, the Board determined that out of the 100 sequential orders, those containing state inspections, routine maintenance, and accessories could not be counted towards the average percentage parts markup under Section 1176. (R. 2708, ¶ 6.) As a result, the Board concluded that the submissions included 59 so-called "qualifying repair orders" for the Ellsworth dealership, and 68 for Augusta. (Id.)
The Board also determined that Darling's method of computing its average percentage markup was appropriate under Section 1176 because the section did not set out a particular method of calculation. (R. 2711, ¶ 25.) As a result, the Board concluded that Darlings submittedits repair orders "according to the law" and properly established its average percentage markup. (Id. at ¶ 26; R. 2712, ¶ 35.)
Based on the above findings of fact and conclusions of law, the Board determined that Chrysler violated Section 1176 by failing to timely pay Darling's the increase in its average percentage markup from 85% to 131%. (R. 2712, ¶ 35.) As a result, the Board imposed the maximum civil penalty permitted under Section 1171-B(3) of $10,000. (Id.)
Chrysler contends that Darling's declaration of its average percentage parts markup rate failed to meet section 1176's requirement of establishing the rate "by submitting to the franchisor 100 sequential nonwarranty customer-paid service repair orders....covering repairs made no more than 180 days before the submission and declaring the average percentage markup," 10 M.R.S. § 1176. This is because Darling's 100 nonwarranty customer paid-service repair...
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