General Aviation, Inc. v. Cessna Aircraft Co.

• Decision Date: 16 December 1988
• Docket Number: No. G85-890-CA5.,G85-890-CA5.
• Citation: 703 F. Supp. 637
• Parties: GENERAL AVIATION, INC., Plaintiff, v. CESSNA AIRCRAFT COMPANY, Defendant.
• Court: U.S. District Court — Western District of Michigan

703 F. Supp. 637

GENERAL AVIATION, INC., Plaintiff, v. CESSNA AIRCRAFT COMPANY, Defendant.

No. G85-890-CA5.

United States District Court, W.D. Michigan, S.D.

December 16, 1988.

Michael E. Cavanaugh, Fraser, Trebilcock, Davis & Foster, Lansing, Mich., for plaintiff.

Roger Clark, Warner, Norcross & Judd, Grand Rapids, Mich., for defendant.

OPINION OF THE COURT

ROBERT HOLMES BELL, District Judge.

This case presents numerous claims growing out of the nonrenewal of a distributorship agreement between the parties. Defendant has moved for summary judgment under Fed.R.Civ.P. 56(c) as to all claims.

Plaintiff General Aviation, Inc., describes itself as "a fixed base operator located at Capitol City Airport in Lansing, Michigan, providing a variety of aviation services, including flight training, aircraft charters, aircraft maintenance and gasoline sales." Defendant Cessna Aircraft Company is an aircraft manufacturer with its principal place of business in Wichita, Kansas. From 1977 to 1984, the parties entered into a series of one-year dealer agreements under which General Aviation agreed to sell and service Cessna aircraft. At the conclusion of the 1984 Agreement, Cessna refused to renew the agreement and discontinued the distributorship relationship. The stated reason for Cessna's decision is General Aviation's failure to sell its "quota" of aircraft in 1984. General Aviation asserts this reason is pretextual and points to many other dealers whose distributorship agreements were renewed in spite of sales performance records no better than General Aviation's. The real reason for Cessna's decision is said to be the tension caused by General Aviation's expressed dissatisfaction with the quality of the Cessna aircraft it was selling and servicing. General Aviation contends Cessna's action is wrongful and asserts several theories of relief.

Cessna's motion for summary judgment requires the Court to look beyond the pleadings and assess the proof to determine whether there is a genuine need for trial. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). If the moving party carries its burden of "showing" that there is an absence of evidence to support an adverse claim or defense, then the nonmoving party may not simply rely on its pleadings, but must demonstrate, by affidavits, depositions, answers to interrogatories, and admissions on file, that there is a genuine issue of material fact for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 324-25, 106 S.Ct. 2548, 2553-54, 91 L.Ed.2d 265 (1986). An issue of fact is "genuine" if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). An issue of fact concerns "material" facts only if establishment thereof might affect the outcome of the lawsuit under governing substantive law. Id. The Supreme Court has elaborated on this materiality requirement as follows:

In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.

Celotex Corp. v. Catrett, supra, 477 U.S. at 322-23, 106 S.Ct. at 2552-53. The Court now employs the foregoing standards in evaluating each of General Aviation's claims.

I. BREACH OF EXPRESS CONTRACT

A. Promise of Continuing Relationship—Written Agreement

General Aviation contends Cessna had committed itself to a continuing relationship and was not justified in terminating it absent good cause. This claim is presented in count I of the first amended complaint. It is asserted in the face of unequivocal language in the parties' final written Agreement indicating, "This Agreement shall terminate upon expiration of its term." Cessna Conquest Sales and Service Agreement of 1984 ("1984 Agreement"), ¶ D.1. The term of the Agreement is defined with equal clarity:

This Agreement becomes effective on the date of its execution October 27, 1983 and shall continue in force until midnight September 30, 1984, unless sooner terminated as herein provided.

1984 Agreement, ¶ E.7. And while the parties may genuinely have "contemplated" renewal of the Agreement at the conclusion of its term, they agreed that absent execution of a new Agreement, their relationship would "automatically end." Id.¹ Thus, at the end of the Agreement's term, affirmative action was required of the parties, not only to renew the Agreement, but also to continue the relationship. The unavoidable implication of this language is twofold: (1) that absent an Agreement there would be no relationship; and (2) that inaction by either party would result in termination of the relationship, without regard for the party's reasons therefor.

General Aviation's contrary position is based primarily on the following language:

Cessna and Dealer recognize that, subject to the conditions set forth in Paragraph E.7., it is contemplated the relationship between Dealer and Cessna shall be a continuing one.

1984 Agreement, ¶ B.2.(b). This language is contained in the "Operational Requirements" of the Agreement and pertains particularly to ordering by General Aviation of new aircraft, accessories and equipment. It forms a preface for the following provision:

Accordingly, it is agreed that aircraft orders may be placed for delivery of aircraft outside the term of this Agreement. In such event, the provisions of such orders on prices, deposits and liquidated damages shall be those in effect at the time of delivery of aircraft so ordered. Id. Reading the language asserted by General Aviation in context reveals that its purpose is limited.

Moreover, a statement of the parties' "contemplation" that the relationship will be ongoing, cannot reasonably be construed as a "promise" by either party that the relationship will not be terminated, even upon expiration of the pending Agreement's term, absent "good cause." This is true notwithstanding the use of the word "shall." While "shall" usually connotes mandatoriness, the context of its use may compel a different construction. Here, the parties' use of the phrase "it is contemplated" in conjunction with "shall" vitiates its mandatory quality and clearly indicates intention to connote simple futurity.

The correctness of this construction is borne out by the very language of the provision itself. The parties' contemplation of a continuing relationship is expressly "subject to the conditions set forth in Paragraph E.7.," dealing with automatic termination of the relationship at the end of the Agreement's term absent a new Agreement. Thus, ¶ B.2.(b) does not purport to alter or conflict with the termination provisions of ¶ E.7., but is subordinate thereto. To rely on ¶ B.2.(b) as a basis for understanding that the Agreement was subject to nonrenewal, or the relationship subject to termination, only for cause, is to ignore the provision's plain language. General Aviation's proffered construction of ¶ B.2.(b) is plainly untenable.

Reading the Agreement as a whole compels the same conclusion. If ¶ B.2.(b) means what it, on its face, purports to mean, then it leaves unaltered the "nonrenewable-at-will" status of the Agreement and is consistent with other termination provisions. Thus, by reading the provision in a direct, straightforward manner, the Court observes its duty to construe the contract so as to harmonize and give effect to all its parts, if possible. Brown v. Lang, 234 Kan. 610, 675 P.2d 842, 847 (1984).²

Accordingly, the Court finds within the four corners of the parties' written Agreement no promise of a continuing relationship whereby Cessna agreed not to fail to renew the Agreement absent good cause.

B. Promise of Continuing Relationship—Parol Evidence

Further, the Court must decline to consider parol evidence offered for the purpose of showing that the parties' actual agreement is different from the written Agreement. General Aviation asks the Court to enforce oral representations made by representatives of Cessna as though they were part of the written Agreement. Essentially, these representations appear to be assurances to dealers en masse that their relationships with Cessna would be continuing and that they would be treated fairly and equally. Consideration of such evidence for the purpose of varying the terms of the parties' written Agreement is barred by the parol evidence rule.³ This is true whether the parol evidence rule applied originates in the common law or in Article 2 of the Uniform Commercial Code, governing contracts for sales of goods.

Michigan's common law parol evidence rule is stated succinctly as follows:

Where a contract is clear and unambiguous, parol evidence of negotiations cannot be admitted to vary the contract ... The parol evidence rule also bars admission of prior or contemporaneous agreements that contradict or vary the written contract ... Prerequisite to application of the parol evidence rule is a finding that the parties intended the writing to be a complete expression of their agreement.

Central Transport, Inc. v. Fruehauf Corp., 139 Mich.App. 536, 544, 362 N.W.2d 823 (1984) (citations omitted). The facts of the instant case satisfy all of these elements. The Agreement, by its own terms, expressly purports to represent the parties' exclusive and complete agreement.⁴ By its length and thoroughness, too, it attests to the parties' intent to describe all aspects of their relationship in the written Agreement. The Agreement's provisions, regarding...