Motorsport Engineering, Inc. v. Maserati Spa

• Decision Date: 20 December 2002
• Docket Number: No. 02-1082.,02-1082.
• Parties: MOTORSPORT ENGINEERING, INC., d/b/a Majestic Cars, Ltd., Plaintiff, Appellant, v. MASERATI SPA; Maserati North America, Inc., Defendants, Appellees. Ferrari S.p.A., Auto-Mobiles of New England, Intervenor-Counter-claimant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

316 F.3d 26

MOTORSPORT ENGINEERING, INC., d/b/a Majestic Cars, Ltd., Plaintiff, Appellant, v. MASERATI SPA; Maserati North America, Inc., Defendants, Appellees Ferrari S.p.A., Auto-Mobiles of New England, Intervenor-Counter-claimant, Appellee.

No. 02-1082.

United States Court of Appeals, First Circuit.

Heard September 5, 2002.

Decided December 20, 2002.

Louis A. Cassis with whom Cassis, Arena & Cayer, Evan T. Lawson, and Lawson & Weitzen, LLP were on brief for appellant.

Jason P. Isralowitz with whom Carl J. Chiappa, John J. Sullivan, Gregory S. Shaffer, Sarah Kellogg and Kirkpatrick & Lockhart LLP were on brief for defendants appellees and intervenor-counter-claimant, appellee.

Before BOUDIN, Chief Judge, TORRUELLA and LYNCH, Circuit Judges.

BOUDIN, Chief Judge.

This appeal is taken by plaintiff-appellant Majestic Cars, Ltd., a sports car dealer in Cohasset, Massachusetts, from the district court's grant of summary judgment in favor of the defendant-appellees Maserati and Ferrari.¹ The factual background is complicated; less so are the facts needed to resolve the appeal. On an appeal from summary judgment, we review the issues de novo, drawing inferences in favor of the non-moving party. Carroll v. Xerox Corp., 294 F.3d 231, 237 (1st Cir.2002). Here, the facts pertinent to our disposition are not in dispute.

In 1986, Majestic entered into an agreement making it a Massachusetts dealer for a famous brand of Italian sports cars called Maserati. At that time, the North American distributor for Maserati was Maserati Automobiles, Inc. ("MAI"); the manufacturer, based in Italy, was Officine Alfieri Maserati S.p.A ("OAM"). Another Italian company — DeTomaso Industries, Inc. ("DTI") — controlled both MAI and OAM, owning all of the former and 85 percent of the latter. In 1989 Majestic renewed the contract; this 1989 agreement is central to this case.

In the 1989 contract, the signatories were MAI as distributor and Majestic as dealer. OAM did not sign the contract. However, it did obtain certain rights under the agreement (e.g., a right to damages if Majestic misused the Maserati trademark) and was designated as a third-party beneficiary. The contract had no termination date but provided that it would terminate "immediately" if Maserati vehicle sales ended in the United States, or MAI ceased to be the sole U.S. importer, or MAI's distribution method substantially changed. The parties have assumed on this appeal that Massachusetts law governs the contract.

In the late 1980s, Maserati sales in America declined sharply, partly because the cars did not meet U.S. emission and other standards. In 1990, the Maserati factory stopped making cars for the United States. Majestic was able to obtain about ten more cars out of MAI's existing inventory and, apart from that, received only spare parts through MAI. However, Majestic continued to retail spare parts and to hold itself out as a Maserati dealer, hoping that Maserati would one day resume shipments to the United States. For over ten years, Maseratis were not made for the U.S. market.

During this period, OAM's assets changed hands in a series of transactions. In 1990, the factory and trademark were transferred to a new company, Maserati S.r.l. ("Maserati I"), partly owned by DTI and partly by a subsidiary of the giant Fiat car making concern. Later, all of the assets passed into the hands of Ferrari S.p.A., itself a famous Italian car manufacturer also controlled by the Fiat enterprise. This new subsidiary, called Maserati S.p.A. ("Maserati II"), began selling Maseratis in the United States in 2002 through its own distributor, Maserati North America, which is also a subsidiary of Ferrari. Majestic was not designated as a Maserati dealer by these new companies and was told to stop holding itself out as an authorized dealership.

Majestic then sued Maserati II (the present manufacturer) and Maserati North America (the present distributor) in state court. Pertinently, the complaint asserted claims based on the 1989 contract, the federal Automobile Dealers' Day in Court Act, 15 U.S.C. §§ 1221-1225 (2000), and a Massachusetts statute, Mass. Gen. Laws ch. 93B (2000). Ferrari intervened and counter-claimed against Majestic for trademark infringement. The case was removed to federal district court. On cross motions for summary judgment, the court ruled against Majestic both on its own claims and on Ferrari's counter-claim request for an injunction barring Majestic from using the Maserati name. Motorsport Eng'g, Inc. v. Maserati, S.p.A., 183 F.Supp.2d 209 (D.Mass.2001). Majestic now appeals.

Majestic's main claim on this appeal rests on three propositions: that OAM was bound by the 1989 dealership contract, that OAM's obligations were inherited by those who succeeded to OAM's assets, including Maserati I and II, and that the contract gives Majestic the right to continued operation as a Maserati dealer or to damages. The inheritance theory is very dubious (the district court rejected it); and it is also unclear how Majestic would avoid the termination provisions already mentioned. But the cleanest answer to the contract claim (also adopted by the district court) is that OAM was never liable on the contract.

OAM was not a signatory to the contract; it was identified explicitly as a third-party beneficiary. Further, the contract went out of its way to say that Majestic's agreement was "solely with MAI" and that Majestic shall "in no event ... have any right of redress against Maserati S.p.A. [as OAM was called in the contract] for failure or delay in delivery." Majestic appears to understand that a non-contracting party is not liable on a contract but it says — in the first of several arguments — that OAM was "in reality" a party to the contract because it was given explicit rights under the contract.

This argument rests on a misunderstanding of contract law. A third-party beneficiary is one who is given rights under a contract to which that person is not a party. 13 Williston, Contracts § 37:1, at 9-10 (4th ed. 2000); Flattery v. Gregory, 397 Mass. 143, 489 N.E.2d 1257, 1261 (1986). Obligations under such a contract, including any obligations to third parties, are created by agreement between the signatories (here, Majestic and MAI). If the signatories so intend, a third party can enforce the contract against the signatory so obligated. Restatement (Second) of Contracts § 304 (1981). But the third-party beneficiary, who did not sign the contract, is not liable for either signatory's performance and has no contractual obligations to either. See Farnsworth, Contracts § 10.9, at 773 (1990).

Majestic's second argument is that OAM is liable on the contract because MAI was OAM's "agent." The district court rejected any claim that OAM so dominated MAI as to allow Majestic to disregard the corporate form ("piercing the corporate veil") and to hold OAM to be the real contracting party. See, e.g., My Bread Baking Co. v. Cumberland Farms, Inc., 353 Mass. 614, 233 N.E.2d 748, 751 (1968). But at least in this court Majestic disclaims any reliance on veil piercing doctrine and relies instead on agency doctrine. An agent is simply someone who is authorized by the principal to act on the principal's behalf and bind the principal as if the latter were there himself. Restatement (Second) of Agency § 1 (1958).

It is quite true that one can contract through an agent and become personally liable; this commonly occurs, for example, in home purchases where a real estate agent may sign the contract "for" the buyer or seller. See, e.g., Fejta v. GAF Cos., 800 F.2d 1395, 1396 (5th Cir. 1986). But there is nothing whatsoever to suggest that MAI was signing the contract "for" OAM — indeed, the disclaimers quoted above show...