Lafontaine Saline, Inc. v. Chrysler Grp., LLC.

Citation852 N.W.2d 78,496 Mich. 26
Decision Date10 June 2014
Docket NumberDocket Nos. 146722,Calendar No. 7.,146724.
CourtMichigan Supreme Court

496 Mich. 26
852 N.W.2d 78


Docket Nos. 146722, 146724.
Calendar No. 7.

Supreme Court of Michigan.

Argued March 6, 2014.
Decided June 10, 2014.

[852 N.W.2d 80]

Ward M. Powers, Northville, for LaFontaine Saline, Inc.

Dykema Gossett PLLC (by Jill M. Wheaton, Arbor and Thomas S. Bishoff, Detroit) and Wilmer Cutler Pickering Hale and Dorr LLP (by Robert D. Cultice, pro hac vice), for Chrysler Group, LLC.

Plunkett Cooney (by Mary Massaron Ross, Bloomfield Hills and Josephine A. DeLorenzo), for IHS Automotive Group, LLC.

Abbott Nicholson, P.C., Detroit (by Robert Y. Weller II and Kristen L. Baiardi), for the Detroit Auto Dealers Association and the Michigan Auto Dealers Association.

Hogan Lovells U.S. LLP (by Jacqueline S. Glassman), for the Alliance of Automobile Manufacturers.


This case concerns whether the 2010 amendment of the Motor Vehicle Dealer Act (MVDA),1 expanding the relevant market area—the area within which automobile manufacturers are required to notify an existing dealership of the manufacturer's intent to establish a dealership selling the same line of vehicles as that existing dealership—from a six-mile radius to a nine-mile radius, applies retroactively. We conclude that it does not. The 2010 Amendment of the MVDA contains no language suggesting retroactivity, and applying the amendment retroactively would alter the parties' existing contract rights. A manufacturer-dealer relationship, absent contrary language in the contract, incorporates the relevant market area in effect at the time when the dealer agreement was entered. The six-mile relevant market area in effect in 2007, then, governs the 2007 manufacturer-dealer agreement at issue in this case. We therefore vacate the judgment of the Court of Appeals and remand this case to the Washtenaw Circuit Court for reinstatement of summary disposition in favor of defendants Chrysler Group (Chrysler) and IHS Automotive Group (IHS).


Chrysler and plaintiff LaFontaine Saline Inc. (LaFontaine), an authorized Chrysler automobile dealer, entered into a Dealer Agreement on September 24, 2007. The agreement granted LaFontaine the non-exclusive right to sell Dodge vehicles from its location in Saline, Michigan, and defined LaFontaine's Sales Locality as “the area designated in writing to [LaFontaine] by [Chrysler] from time to time as the territory of [LaFontaine's] responsibility for the sale of [Chrysler, Jeep, and Dodge] vehicles, vehicle parts and accessories....” The agreement further provided that LaFontaine's “Sales Locality may be shared with other [Chrysler] dealers of the same line-make as [Chrysler] determines to be appropriate.”

The parties agree that the 2007 Dealer Agreement is subject to the MVDA, which regulates relationships among automobile manufacturers, distributors, and dealers. In particular, the MVDA's relevant market area provision limits Chrysler's right to establish dealerships of the same line of vehicles in the vicinity of LaFontaine's existing dealership. This section, MCL 445.1576(2), provides:

Before a manufacturer or distributor enters into a dealer agreement establishing or relocating a new motor vehicle dealer within a relevant market area where the same line make is

[852 N.W.2d 81]

represented, the manufacturer or distributor shall give written notice to each new motor vehicle dealer of the same line make in the relevant market area of its intention to establish an additional dealer or to relocate an existing dealer within the relevant market area.2

This notice requirement further entitles a recipient dealer to file a declaratory judgment action requiring the manufacturer to show good cause for establishing a new dealership within the relevant market area.3

At the time Chrysler and LaFontaine entered into their 2007 Dealer Agreement, MCL 445.1566(a) defined “relevant market area” as “the area within a radius of 6 miles of the intended site of the proposed or relocated dealer.” 4 Significantly, this same six-mile radius was in effect when, on February 2, 2010, Chrysler and IHS, another Dodge automobile dealer, entered into a “Letter of Intent to Add Vehicle Line” (LOI). The LOI provided that Chrysler “will accept [IHS's] offer to enter into an Agreement” to sell Dodge vehicles upon IHS's satisfaction of certain conditions enumerated in the LOI.5 The LOI further provided Chrysler the discretionary right to terminate the LOI should “anyone file a protest or lawsuit, demand arbitration or otherwise challenge ... the proposed establishment” if the challenge is not withdrawn or dismissed within 90 days of filing.

After execution of the LOI, the Legislature expanded the statutory definition of relevant market area from the six-mile radius to “the area within a radius of 9 miles” of the intended site of the proposed or relocated dealership.6 Although the proposed location for IHS's Dodge facility is outside the pre-amendment six-mile radius of LaFontaine's existing dealership, it is within the post-amendment nine-mile radius of that location. On September 3, 2010, LaFontaine contacted Chrysler, indicating its protest of the proposed IHS

[852 N.W.2d 82]

Dodge dealership location in light of the nine-mile radius established by the 2010 Amendment. Chrysler responded on October 8, 2010, communicating its continuing intent to establish a Dodge dealership at IHS's Ann Arbor location.

LaFontaine then filed a complaint for declaratory relief, challenging the proposed dealership under the MVDA. Chrysler and IHS responded with a motion for summary disposition, alleging that the 2010 Amendment did not apply to the proposed dealership because their LOI predated the Amendment, and LaFontaine therefore had no statutory right to challenge it. They further argued that applying the 2010 Amendment to the LOI and to the 2007 Chrysler–LaFontaine Dealer Agreement would be an impermissible retroactive application of the law. LaFontaine argued that its 2007 Dealer Agreement with Chrysler did not address or refer to LaFontaine's relevant market area, and therefore application of the 2010 Amendment could not interfere with that agreement. Even if the 2010 Amendment applied only prospectively, LaFontaine asserted that the LOI did not constitute a dealer agreement, but merely an agreement for certain improvements to IHS's facilities in anticipation of a dealer agreement. Any formal dealer agreement, LaFontaine argued, must follow the August 4, 2010 effective date of the amendment and be subject to the nine-mile relevant market area.

The Washtenaw Circuit Court granted Chrysler's and IHS's motions for summary disposition, concluding that the 2010 Amendment did not overcome the presumption that statutory amendments generally operate prospectively only. The Legislature provided a specific effective date of August 4, 2010, and omitted any reference to retroactivity. The circuit court further found that the LOI between Chrysler and IHS constituted a dealer agreement under the MVDA, and thereby established the parties' rights upon execution. The court denied LaFontaine's motion for reconsideration, adding that LaFontaine's claim was not ripe because it “rests on contingent future events that may not occur,” i.e., a formal Dealer Agreement.

The Court of Appeals reversed the circuit court in a published opinion, concluding that the issue of retroactivity was immaterial because the LOI was not a dealer agreement because it did not establish the “legal rights [or] obligations of [Chrysler or IHS] with regard to the purchase and sale or resale of new motor vehicles and accessories for motor vehicles.” 7 The Court of Appeals held that any dealer agreement could necessarily occur only after the effective date of the 2010 Amendment, and application of that amendment could not have retroactive effect on any dealer agreement between Chrysler and IHS.8 Moreover, because the 2010 Amendment applied and the MVDA allows a dealer to bring a declaratory judgment action upon notice of a manufacturer's intent to establish a like-line dealership, the Court of Appeals held that LaFontaine had standing to sue to determine whether good cause existed for IHS's proposed dealership.9 The Court of Appeals denied Chrysler's and IHS's motions for reconsideration.

[852 N.W.2d 83]

We granted Chrysler's and IHS's applications for leave to appeal, requesting that the parties address:

whether the Court of Appeals erred in holding that the 2010 PA 139 definition of “relevant market area,” MCL 445.1566(1)(a), applied to enable the plaintiff to challenge the future dealer agreement between the defendants under MCL 445.1576(3). Compare Kia Motors America, Inc. v. Glassman Oldsmobile Saab Hyundai, Inc., 706 F.3d 733, 735 (C.A.6, 2013).10


Chrysler and IHS moved for summary disposition under MCR 2.116(C)(8) and (10). Summary disposition under MCR 2.116(C)(8) is appropriate where the complaint fails to state a claim on which relief may be granted.11 A motion for summary disposition under MCR 2.116(C)(10) challenges the factual sufficiency of the complaint, with the trial court considering the entire record in a light most favorable to the nonmoving party. 12 We review de novo a trial court's ruling on a motion for summary disposition.13 We also review questions of statutory interpretation de novo,14 including questions regarding retroactivity of amendments. 15


In establishing whether the 2010 Amendment applies on the facts of this case, we first examine the source, if any, of the parties' contractual rights that predates the 2010 Amendment. Only then can we determine whether retroactive application of the 2010 Amendment's expanded relevant market area would interfere with any such rights.


The MVDA in effect at the time of both the 2007 Chrysler–LaFontaine Dealer Agreement and 2010 Chrysler–IHS LOI defined “Dealer agreement” as


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