Noller v. GMC Truck and Coach Div., General Motors Corp.

• Decision Date: 26 August 1988
• Docket Number: No. 60903,60903
• Parties: Laird NOLLER, Appellant, v. GMC TRUCK AND COACH DIVISION, GENERAL MOTORS CORPORATION, Appellee.
• Court: Kansas Court of Appeals

Page 688

760 P.2d 688

13 Kan.App.2d 13

Laird NOLLER, Appellant, v. GMC TRUCK AND COACH DIVISION, GENERAL MOTORS CORPORATION, Appellee.

No. 60903.

Court of Appeals of Kansas.

Aug. 26, 1988.

Review Granted Nov. 8, 1988.

Syllabus by the Court

1. The terms "intended" beneficiary and "incidental" beneficiary are used to distinguish beneficiaries who have rights from those who do not.

2. Unless otherwise agreed between the promisor and promisee, a beneficiary of a promise is an intended beneficiary if recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties.

3. The test to determine whether a beneficiary is incidental or intended is: Would a reasonable person in the position of the promisor conclude that the promisee manifested an intention that the promisor's promised performance was sought at least in part for the benefit of the alleged beneficiary, and, assuming that the answer to the first question is in the affirmative, would a reasonable person in the position of the promisee conclude the promisor acquiesced in the intention of the promisee?

4. Under any approach to contractual interpretation, the agreement itself is the primary evidence which must be examined.

5. If the performance of a contract is to run directly to the promisee, a third party is ordinarily an unprotected incidental beneficiary, but if it is to run to the third party, that party is ordinarily an intended beneficiary with enforceable rights.

6. It is not necessary that the third party be the exclusive beneficiary of all the promisor's performance. The contract may also benefit the contracting parties as well.

7. The intention of the contracting parties and the meaning of a contract are to be determined from the instrument itself where the terms are plain and unambiguous.

8. Every contract implies good faith and fair dealing between its parties and a duty of cooperation on the part of both parties.

9. There is an implied undertaking in every contract on the part of each party that each person will not intentionally and purposely do anything to prevent the other party from carrying out its part of the agreement, or do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract.

10. It is not essential to the creation of a right in the intended beneficiary that the beneficiary be identified when a contract containing the promise is made.

11. A third-party beneficiary need not be named in a contract but its status may be established by pre-contract and post-contractual actions of the parties.

12. A promise in a contract creates a duty in the promisor to any intended beneficiary to perform the promise, and the intended beneficiary may enforce the duty.

13. The increase in franchising throughout Kansas requires that courts protect the parties desiring to acquire the assets of a franchisee by compelling the franchisors to act in accordance with their negotiated franchise agreements.

14. K.S.A. 1987 Supp. 8-2416 establishes an overriding Kansas policy that approval of a written proposal of sale, transfer, or assignment of a vehicle sales franchise is not to be arbitrarily or unreasonably withheld.

15. Third parties dealing with an automobile franchisee have the absolute right to negotiate with the franchisee for the purchase of assets with the expectation the franchisor will be required to faithfully comply with and follow the terms of an existing franchise agreement.

16. A claim for intentional interference with a contractual relationship does not exist where an enforceable contract does not exist between the parties.

17. In Kansas, the requirements for a cause of action for tortious interference with a prospective business advantage or relationship are: (1) the existence of a business relationship or expectancy with the probability of future economic benefit to the plaintiff; (2) knowledge by the defendant of the relationship or expectancy; (3) except for the conduct of the defendant, plaintiff was reasonably certain to have continued the relationship or realized the expectancy; (4) intentional misconduct by defendant; and (5) damages suffered by plaintiff as a direct or proximate result of defendant's misconduct.

18. One who intentionally and improperly interferes with another's prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation.

19. The determination of whether interference with a prospective contractual relationship is improper depends upon a comparative appraisal of the following factors: (a) the nature of the actor's conduct, (b) the actor's motive, (c) the interests of the other with which the actor's conduct interferes, (d) the interests sought to be advanced by the actor, (e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other, (f) the proximity or remoteness of the actor's conduct to the interference, and (g) the relationship between the parties.

20. A proposed purchaser of a motor vehicle franchisee's assets has a cause of action both as an intended beneficiary of the franchise agreement and for tortious interference with a prospective business advantage against a franchisor who deliberately failed to faithfully follow the terms of an existing franchise agreement.

Charles D. McAtee, Anne L. Baker, and John D. Ensley of Eidson, Lewis, Porter & Haynes, Topeka, for appellant.

Robert J. Harrop of Gage & Tucker, Kansas City, Mo., Stephen A. Murphy of Gage & Tucker, Overland Park, and Charles E. Fairfax, III, and Judith A. Zakens of General Motors Corp. of Detroit, Mich., for appellee.

Before DAVIS, P.J., and LARSON and GERNON, JJ.

LARSON, Judge:

Laird Noller filed a breach of contract action against GMC Truck and Coach Division, General Motors Corporation (GMC) on the theory he was a third-party beneficiary of the franchise Dealer Sales and Service Agreement (DSSA) between GMC and Jay Beard Trucks, Inc. Noller also alleged GMC tortiously interfered with his prospective business advantage and with his contract with Beard to purchase Beard's assets conditioned upon his being approved as a GMC dealer. The trial court granted summary judgment to GMC on all three counts. Noller appeals.

Beard began business as the GMC truck dealer in Topeka in 1976. On November 1, 1980, GMC renewed Beard's DSSA, which in paragraph Fourth, entitled "Changes in Management and Ownership," provides:

"If Dealer desires to make a change in its Dealer Operator(s) or ownership or sell its principal assets to a party that wishes to become an authorized dealer, Dealer will give General Motors prior written notice of the proposed change or sale. General Motors shall not arbitrarily refuse to agree to such proposed change or sale.

"Dealer agrees to provide in the form requested and in a timely manner all applications and information customarily requested by General Motors to evaluate the proposed change or sale. General Motors agrees to consider all factors requested by Dealer and base its decision on whether the proposed change is likely to result in a successful dealership operation with acceptable management and ownership which will provide satisfactory sales and service for GMC Truck customers at the approved location."

Article III C of the agreement, entitled, "Other Changes in Management and Ownership or Sale of Assets," provides:

"In order for General Motors to effectively perform its responsibility to administer the authorized dealer system, Dealer agrees in Paragraph FOURTH to give General Motors prior written notice of any proposed change in its Dealer Operator(s) or ownership or any proposed disposition of its principal assets. In turn, General Motors agrees to consider Dealer's proposal under the standards identified in Paragraph FOURTH and not to arbitrarily refuse to agree to such proposal. In determining whether the proposal is acceptable to it, General Motors will take into account the qualifications, personal and business reputation and financial standing of the proposed dealer operator and owners, as well as General Motors' interest in promoting and preserving competition among General Motors dealerships, and between those dealerships and dealerships representing competing motor vehicle manufacturers.

"Dealer shall be notified in writing of General Motors' agreement or disagreement to Dealer's proposal within sixty days after Dealer has furnished all applications and information reasonably requested by General Motors to evaluate such proposals."

With respect to the rights of General Motors to select dealers, the agreement provides:

"General Motors has the right to select each successor and replacement dealer and to approve its owners and principal management and the location of its dealership facilities. General Motors shall perform such responsibility as set forth in Paragraph FOURTH on the basis of evaluating each candidate's qualifications and proposal for the conduct of dealership operations against the standards set forth in this Agreement." (Emphasis added.)

On July 3, 1981, Jay Beard wrote to GMC's Kansas City zone manager advising that, as a result of severe economic difficulties, a depressed market, and health problems, it was his intent to sell the assets of Jay Beard Trucks, Inc. GMC acknowledged the receipt of the July 3 letter and by a reply dated July 9, 1981, offered the following for Beard's guidance in the consideration of such sale:

"1. You have the right to sell the physical assets of your company at any time to anyone you wish on whatever basis you may negotiate.

"2. The sale of the assets of your company will necessarily result in the termination of the Dealer Sales and Service Agreement for GMC Truck Motor Vehicles in effect between us.

"3. The Dealer Agreement by its own terms is not...