Freightliner Corp. v. Motor Vehicle Bd.

• Decision Date: 01 May 2008
• Docket Number: No. 03-05-00289-CV.,03-05-00289-CV.
• Citation: 255 S.W.3d 356
• Parties: FREIGHTLINER CORPORATION and Ford Motor Company, Appellants v. MOTOR VEHICLE BOARD OF the TEXAS DEPARTMENT OF TRANSPORTATION and Metro Ford Truck Sales, Inc., Appellees.
• Court: Texas Court of Appeals

255 S.W.3d 356

FREIGHTLINER CORPORATION and Ford Motor Company, Appellants v. MOTOR VEHICLE BOARD OF the TEXAS DEPARTMENT OF TRANSPORTATION and Metro Ford Truck Sales, Inc., Appellees.

No. 03-05-00289-CV.

Court of Appeals of Texas, Austin.

May 1, 2008.

N. Terry Adams, Martin D. Beirne, Brit T. Brown, Benjamin A. Escobar, Beirne, Maynard & Parsons, L.L.P, S. Shawn Stephens, Billy M. Donley, David R. Jarrett, Baker & Hostetler, L.L.P, Houston, for appellants.

Thomas V. Murto, III, Mitchell Madden, Cameron Dee Sewell, Madden Sewell, L.L.P., Dallas, Susan G. White, Sapp & White, P.C., Austin, Linda B. Secord, Asst. Atty. Gen., Natural Resources Div., Office of Atty. Gen., Austin, for appellees.

Before Justices PATTERSON, PEMBERTON and WALDROP.

OPINION

G. ALAN WALDROP, Justice.

In this direct appeal, we consider whether an agency can, on remand after courts have considered and affirmed the agency's decision in part, revisit an issue affirmed by the courts and reverse the original result based on the same record. Based on the procedural history of this case, we conclude that the Motor Vehicle Board of the Texas Department of Transportation did not have the power on remand to revisit its original determination that Ford Motor Company had good cause to terminate Metro Ford Truck Sales, Inc.'s truck dealer's franchise. We reverse the Board's order entered after remand in which the Board found that Ford did not have good cause to terminate Metro's franchise. We remand for any necessary proceedings that follow the determination that a manufacturer has good cause to terminate its truck dealer's franchise.

Ford first tried to terminate Metro's truck franchise more than a decade ago.¹ In 1993, complaints by competing dealers prompted Ford to investigate Metro's administration of Ford's Competitive Price Assistance ("CPA") program. Discovering what it believed to be improprieties, Ford sought to terminate Metro's franchise to sell Ford trucks. Metro filed a protest, triggering a proceeding before the Board to determine whether Ford had good cause to terminate the franchise. See Tex. Occ. Code Ann. § 2301.453 (West 2004).² The filing of the protest prompted the entry of a statutory stay that prevented the parties from committing any act or omission that would affect a legal right, duty, or privilege of any party before the Board. Id. § 2301.803 (West 2004).

In 1997, while the administrative proceeding was pending, Ford sold assets of its heavy-duty truck division to Freightliner Corporation and withdrew from selling heavy-duty trucks. Ford heavy-duty truck dealers in good standing could apply to be Freightliner franchisees. The administrative law judge joined Freightliner as a necessary party to the proceeding and made Freightliner subject to the stay, requiring Freightliner to provide Metro with the same heavy-duty trucks that Ford had provided. Freightliner provided heavy-duty trucks to Metro through Sterling Truck Corporation. Ford continued to manufacture and distribute light- and medium-duty trucks through its franchisee dealers, including Metro.

In 1998, the Board adopted the 48 findings of fact and 4 conclusions of law proposed by the administrative law judge. The Board found that Metro misused the CPA program and that some Ford district and regional employees were aware of that misuse. The last finding of fact and first conclusion of law are central to the resolution of this appeal:

48. In light of the above findings of fact, a reasonable resolution to Ford's request for termination of Metro's franchise agreement is for Metro to be require[d] to sell the dealership to a buyer of Ford and Freightliner's choosing at a price established by an independent appraiser.

. . . .

1. Ford has established good cause for the termination of Metro's franchise agreements in accordance with §§ 5.02(b)(3) and 5.02(b)(5) of the TMVC Code.

Metro sought judicial review of the 1998 Board decision. The district court, in its judgment in the initial suit for judicial review, wrote the following:

The court finds that the board's finding of good cause for termination of Metro Ford Truck Sales, Inc. is supported by substantial evidence. The court concludes that the board may impose a remedy short of complete termination. The court concludes, however, that the remedy imposed in the order is unlawful. The court REMANDS to the Motor Vehicle Board for the board to make a new order consistent with these proceedings.

See Metro Ford Truck Sales, Inc. v. Motor Vehicle Bd., Texas Dep't of Transp., No. 98-07064, 1999 WL 34771188 (353d Dist. Ct., Travis County, Tex. Apr. 12, 1999).

This Court affirmed the district court's decision.³ In its judgment, this Court wrote that "the judgment of the trial court is in all things affirmed." In its opinion, this Court explained, "Having concluded that there is substantial evidence to support the Board's finding of good cause to terminate Metro and that the Board's imposition of the specific conditions is unlawful, we affirm the portion of the district court judgment relating to the imposition of the conditions." Ford Motor Co. v. Motor Vehicle Bd., 21 S.W.3d 744, 766 (Tex.App.-Austin 2000, pet. denied). This Court proceeded to "remand the cause to the Board for further proceedings not inconsistent with this opinion." Id. at 767. Thus, the Board's original finding in Conclusion of Law No. 1 that there was good cause for Ford to terminate Metro's dealership was affirmed, and the condition the Board imposed with respect to the sale of the dealership in Finding of Fact No. 48 was reversed. The cause was remanded for the Board to consider other available remedies in light of its finding of good cause for termination. After the supreme court denied the petition for review, mandate issued on May 25, 2001.

The Board did not dispose of this cause until almost four years later. In a Supplemental Proposal for Decision After Remand signed January 11, 2002, the ALJ proposed a new order that did not disturb the finding of good cause for termination. The ALJ expressly considered what "termination conditions" might be acceptable. The ALJ proposed replacing Finding of Fact No. 48 from the original order with two findings requiring Ford and Freightliner to establish a new dealer or dealers to replace Metro before terminating Metro's franchise, thus avoiding a break in service to entities reliant on Metro, and also proposed adding a conclusion that Metro would not be able to protest the new dealers. On April 25, 2002, the Board tabled consideration of this supplemental proposal and revived a proceeding in which Metro challenged appellants' refusal to allow Metro to transfer the franchise.

Metro filed protests challenging the reasonableness of appellants' rejection of two proposed transfers of the franchise. The Board's decisions in those proceedings are the subject of appeals argued concurrently with this appeal. Sterling Truck Corp. v. Motor Vehicle Bd., No. 03-05-00288-CV, 255 S.W.3d 368, 2008 WL 1912071 (Tex. App.-Austin May 1, 2008) (Metro V); Ford Motor Co. v. Motor Vehicle Bd., 03-05-00290-CV, 2008 WL 1912102 (Tex.App.-Austin May 1, 2008) (Metro IV). Briefing by the parties indicates that other proceedings not before this Court also transpired among the parties while this cause was tabled.

On February 3, 2005, after hearing further argument, the Board issued its Final Order After Remand without taking any additional evidence. Ford argued that the Board did not have the authority to revisit the good cause determination. Metro focused on the judicial approval of remedies short of absolute termination and argued that the district court generally remanded the entire case. The Board readopted all of the findings and conclusions from the original order except Finding of Fact No. 48 and Conclusion of Law No. 1. The Board rejected those two and, in their stead, added the following:

Finding of Fact No. 49. In considering all the existing circumstances surrounding the proposed termination of Metro, including Metro's actions, the knowledge of Ford employees about Metro's actions, the realities of the CPA program, and the public need for continued Ford and Sterling medium and heavy truck service in Metro's trade area, Ford has failed to show good cause for the termination of Metro's franchise agreements.

. . . .

Conclusion of Law No. 5. Ford failed to show good cause for the termination of Metro's franchise agreements in accordance with §§ 5.02(b)(3) and 5.02(b)(5) of the TMVC Code.

The Board granted Metro's protest of termination, ordered Ford to cease all termination efforts, and ordered Metro to transfer its franchise to Stanley Graff in accord with the Board's final order issued the same day in Metro V. This direct appeal followed.

Appellants Ford and Freightliner contend that the Board exceeded its power on remand by revisiting its finding that Ford had good cause to terminate Metro's franchise. Appellants contend that the scope of the case remanded did not include the good cause finding. They assert that the Board was limited to the ministerial duty of entering an order finding good cause for termination.

Metro and the Board respond that this Court's decision in 2000 did not require the Board to leave the finding of good cause undisturbed. Appellees argue that this Court could not and did not limit its remand. They contend that, because courts can only identify error and only agencies can correct error, this Court did not have the power to dictate a remedy, but properly left that up to the Board. Appellees also contend that this Court's previous opinion recast the context of the good cause determination, requiring the Board to revisit that determination on remand. They also argue that our previous affirmance of the good cause finding does not prevent us from affirming the current "no good cause" finding based on the identical record because substantial evidence can support diametrically opposed...