North Broadway Motors v. FIAT MOTORS

• Decision Date: 04 September 1984
• Docket Number: No. 84 C 2007.,84 C 2007.
• Citation: 622 F. Supp. 466
• Court: U.S. District Court — Northern District of Illinois
• Parties: NORTH BROADWAY MOTORS, INC., an Illinois corporation, Plaintiff, v. FIAT MOTORS OF NORTH AMERICA, INC., a foreign corporation, Defendant.

622 F. Supp. 466

NORTH BROADWAY MOTORS, INC., an Illinois corporation, Plaintiff, v. FIAT MOTORS OF NORTH AMERICA, INC., a foreign corporation, Defendant.

No. 84 C 2007.

United States District Court, N.D. Illinois, E.D.

September 4, 1984.

Richard H. Balog, Shearer, Blood, Agrella, Boose & Balog, St. Charles, Ill., for plaintiff.

David N. McBride, Teresa E. Raizen, Ross & Hardies, Chicago, Ill., for defendant.

MEMORANDUM OPINION

PRENTICE H. MARSHALL, District Judge.

This is an action by North Broadway Motors, Inc. ("North Broadway"), an automobile dealer, against Fiat Motors of North America, Inc., ("Fiat North America"), which supplied North Broadway with Fiat automobiles. In January 1976, North Broadway entered into a Dealer Sales and Service Agreement with Fiat North America that established North Broadway as a Fiat dealer. According to plaintiff's amended complaint, Fiat North America established a system of unfair and unequal quotas that had the effect of forcing plaintiff to accept a disproportionately high number of automobiles and parts as compared with neighboring Fiat dealers, thus placing plaintiff at a competitive disadvantage. Amended Complaint, Count 1 ¶¶ 7, 8. Further, Fiat North America sold new Fiat cars to automobile liquidators at "cut-rate" prices lower than the prices at which similar cars were offered to plaintiff. Id. ¶ 9. Finally, defendant allegedly forced plaintiff to purchase unpopular Fiat models as a condition precedent of the purchase of more popular models. Id. ¶ 10. As a result of these actions, North Broadway was forced to sell its Fiat dealership at a great loss. Id. Count 2 ¶ 13. After plaintiff gave up its Fiat dealership, the complaint asserts, Fiat North America offered an arbitrarily low price for the repurchase of plaintiff's inventory of parts and automobiles. Id., Count 6 ¶ 14.

The amended complaint is stated in eight counts. In count 1, plaintiff alleges that defendant had an implied obligation under its agreement with plaintiff to provide plaintiff a fair and equitable allocation of Fiat cars, an obligation breached by the previously-described actions. In count 2, plaintiff claims that these actions were done by defendant with malice and the intent to destroy plaintiff's business or to force plaintiff to sell his dealership at a loss. Count 3 is based on the Automobile Dealer's Day in Court Act ("Dealer's Act"), 15 U.S.C. §§ 1221-25 (1982); plaintiff asserts that defendant's actions with respect to allocation of automobiles and purchase price violated the obligation of "good faith" applicable to auto manufacturers contained in id. § 1222. In count 4, plaintiff asserts that these actions violated the Illinois Motor Vehicle Franchise Act ("IMVFA"), Ill. Rev.Stat. ch. 121½, §§ 751-64 (1983), which makes unlawful certain practices concerning allocation of automobiles. Count 5 is based on defendant's alleged refusal to reimburse plaintiff for two claims plaintiff made for performing repair work on Fiat cars covered by the manufacturer's warranty. In count 6, plaintiff asserts that defendant's pricing of plaintiff's inventory was arbitrary, capricious, and willful. Count 7 claims that this conduct violated the IMVFA; count 8 asserts that it violated the Dealer's Act.

Defendant has moved to dismiss all of the complaint except count 5.

COUNTS 1 AND 2

Count 1 is, as we have noted, essentially a breach of contract claim. The contract is attached to the amended complaint. The only obligations it imposes on Fiat North America with respect to allocation of automobiles are as follows:

Fiat North America shall give careful consideration to each order received from Dealer for Fiat passenger cars and other Fiat North America Products....

Fiat North America, however, will not ship any Fiat North America Products to Dealer, except pursuant to Dealer's specific order.

Dealer Sales and Service Agreement ¶ 13(b), (c). The agreement also provides that "there is no other agreement or understanding, either oral or in writing, between the parties affecting this Agreement or relating to the subject matter hereof." Id. ¶ 61(c). It also provides that defendant "shall not be under any liability to Dealer for failure to deliver ... pursuant to orders of Dealer accepted by Fiat North America ...." Id. ¶ 15. Defendant argues, based on these provisions, that there is neither an express nor an implicit agreement by defendant to provide plaintiff a fair and equitable allocation of Fiat cars. Plaintiff's only response to this is that if we read the complaint carefully we will see that it states a claim.

We have read the complaint and the agreement carefully, and we agree with defendant that there is no basis for a claim of breach of contract. Plaintiff does not allege that defendant breached its obligation to give "careful consideration" to plaintiff's orders or its undertaking not to ship products to plaintiff except pursuant to an order. In light of the integration clause contained in ¶ 61(c) of the agreement, we cannot hold defendant responsible for breaching undertakings that are not made expressly in the agreement. Count 1 is therefore dismissed for failure to state a claim upon which relief may be granted.

Count 2, with its allegation of malice and intent to destroy plaintiff's business, appears to be a tort claim. Though once again plaintiff does not attempt to illuminate matters for us with respect to count 2, we must examine the complaint to determine whether its allegations provide for relief under any possible theory, even if that theory is not articulated in the complaint itself. See Knapp v. McCoy, 548 F.Supp. 1115, 1116 (N.D.Ill.1982) (Shadur, J.). The only tort conceivably implicated by the allegations in count 2 is interference with prospective economic advantage. There are four elements of this tort under Illinois law: 1) plaintiff reasonably expects to enter into a valid business relationship; 2) defendant knows of this expectancy; 3) defendant intentionally interferes in plaintiff's expectancy, preventing it from ripening into a valid business relationship; and 4) plaintiff suffers damages as a result of defendant's interference. See Knapp, 548 F.Supp. at 1117 (Illinois law); Bank Computer Network Corp. v. Continental Illinois National Bank and Trust Co., 110 Ill.App.3d 492, 500, 66 Ill.Dec. 160, 166, 442 N.E.2d 586, 592 (1982).

Opportunity to obtain customers is an expectancy protected by the tort action for interference with prospective advantage. Knapp, 548 F.Supp. at 1117. Giving the allegations of the complaint a fair reading, plaintiff asserts that defendant's conduct concerning allocations impaired plaintiff's ability to obtain customers, as plaintiff had a poor "mix" of Fiat automobiles. As we read the complaint, plaintiff had a reasonable expectancy of which defendant was aware. Further, the allegation of malice contained in paragraph 12 of the complaint suffices as an assertion of intentional interference in plaintiff's expectancy, particularly when combined with an allegation of an intent to destroy plaintiff's business or lower its value. Knapp, 548 F.Supp. at 1117. Finally, plaintiff adequately alleges that it was damaged by defendant's conduct in that it had to sell its dealership at a great loss.

The caselaw also requires that a defendant's conduct be wrongful and not in accord with legitimate business practices in order to be actionable. See Panter v. Marshall Field & Co., 646 F.2d 271, 298 (7th Cir.) (Illinois law), cert. denied, 454 U.S. 1092, 102 S.Ct. 658, 70 L.Ed.2d 631 (1981); Knapp, 548 F.Supp. at 1117; Bank Computer, 110 Ill.App.3d at 500-01, 66 Ill.Dec. at 166-67, 442 N.E.2d at 592-93. As the Illinois Appellate Court has stated,

the theory of the tort of interference, it is said, is that the law draws a line beyond which no member of the community may go in intentionally intermeddling with the business affairs of others; that if acts of which the complaint is made do not rest on some legitimate interest, or if there is sharp dealing or overreaching or other conduct below the behavior of fair men sic similarly situated, the ensuing loss should be redressed; and that line of demarcation between permissible behavior and interference reflects the ethical standards of the community.

City of Rock Falls v. Chicago Title & Trust Co., 13 Ill.App.3d 359, 362-63, 300 N.E.2d 331, 333 (1973), quoted in Panter, 646 F.2d at 298. It is established in Illinois law that "one who has an interest may take action to protect his rights, and even if the interference is done with malice he cannot be held financially liable for the result of his actions." Bank Computer, 110 Ill. App.3d at 500, 66 Ill.Dec. at 166, 442 N.E.2d at 592; Petit v. Cuneo, 290 Ill.App. 16, 22, 7 N.E.2d 774, 777 (1937).

It is possible that defendant will take the position that its allocations of automobiles among its dealers was devised in order to ensure that it was able to dispose of all of the automobiles it obtained from the manufacturer and/or in order to develop a market for automobiles other than the so-called "popular" models. These might be legitimate interests that defendant is legally entitled to protect. However, at present we are concerned only with the issue of the adequacy of plaintiff's complaint, and the question is therefore whether "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). We cannot simply assume that defendant acted reasonably in furtherance of its own legitimate objectives and that it did not engage in overreaching. The complaint adequately spells out the elements of a claim for interference with prospective advantage, and defendant's motion to dismiss is therefore denied as it relates to count 2.

COUNTS 4 AND 7

Counts 4 and 7 are, as we have noted, based on the IMVDA. The IMVDA became effective in June 1979...