Olson Motor Co. v. General Motor Corp.

• Decision Date: 28 March 1983
• Docket Number: 82-1267,Nos. 82-1198,s. 82-1198
• Citation: 703 F.2d 284
• Parties: 1983-1 Trade Cases 65,295 OLSON MOTOR COMPANY, a Minnesota corporation; Ray A. Olson and Donna M. Olson, individually and d/b/a Olson Motor Company, Appellants, v. GENERAL MOTORS CORPORATION, a Delaware corporation; and General Motors Acceptance Corporation, a New York corporation, Appellees. OLSON MOTOR COMPANY, a Minnesota corporation; Ray A. Olson and Donna M. Olson, individually and d/b/a Olson Motor Company, Appellees, v. GENERAL MOTORS CORPORATION, a Delaware corporation, General Motors Acceptance Corporation, a New York corporation, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 284

703 F.2d 284

1983-1 Trade Cases 65,295

OLSON MOTOR COMPANY, a Minnesota corporation; Ray A. Olson

and Donna M. Olson, individually and d/b/a Olson

Motor Company, Appellants, v. GENERAL MOTORS CORPORATION, a Delaware corporation; and General Motors Acceptance Corporation, a New York

corporation, Appellees.

OLSON MOTOR COMPANY, a Minnesota corporation; Ray A. Olson

and Donna M. Olson, individually and d/b/a Olson

Motor Company, Appellees, v. GENERAL MOTORS CORPORATION, a Delaware corporation,

General Motors Acceptance Corporation, a New York

corporation, Appellant.

Nos. 82-1198, 82-1267.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 13, 1982.

Decided March 28, 1983.

Fred J. Pain, Jr., P.C., Scottsdale, Ariz., and Richard A. Williams, Hvass, Weisman & King, Minneapolis, Minn., for appellants/cross appellees.

Clay R. Moore, Mackall, Crounse & Moore, Minneapolis, Minn., for appellee and cross-appellant General Motors Acceptance Corp.; Otis M. Smith, General Counsel, and Stephen Selander, Detroit, Mich., of counsel.

Before ROSS and FAGG, Circuit Judges, and SCHATZ, District Judge. ^*

ROSS, Circuit Judge.

On November 4, 1970, Olson Motor Company and Ray and Donna Olson filed this civil action against General Motors (GM) and General Motors Acceptance Corporation (GMAC) under the Automobile Dealers' Day in Court Act, 15 U.S.C. Secs. 1221 to 1225 (1982), and under federal antitrust law. The case is presently before this court on appeal by Ray Olson and Olson Motor and on cross appeal by GMAC.

Facts

Prior to 1961, Ray Olson became a GM dealer as a stockholder in his father's Cadillac-Oldsmobile dealership, Olson Motors, Inc. in Albert Lea, Minnesota. In 1961, Ray's father, Andy Olson, purchased Ray's stock in Olson Motors, Inc. and leased a portion of the premises to Ray, doing business as Downtown Motors. Through this arrangement Ray secured a Pontiac franchise.

In 1969, the Olson Motor Company, a new corporation wholly owned by Ray Olson, entered into dealership agreements with the Pontiac, Oldsmobile and Cadillac Divisions of General Motors. Olson Motor operated from a new larger facility than its predecessors. Ray Olson experienced financial difficulties and in October 1969, GMAC, with whom Ray Olson had a financing agreement, determined that Olson Motor was "out of trust" on its agreement and impounded the company's new and used car inventory in which it had a security interest.

In early November 1969, Ray Olson obtained loans from two businessmen, Chance and Lebert, of approximately $60,000. This sum was paid to GMAC to secure release of the used car inventory to Olson Motor. Subsequently, Chance and Lebert bought out Olson's equity in the business for $5,000 plus a forgiveness of the $60,000 loan. In 1970 Chance and Lebert sold the business assets to Krueger for $37,000. The sale was contingent upon the granting of a dealer agreement by the three General Motors divisions. Oldsmobile, Pontiac and Cadillac entered into new dealer agreements with Krueger after Ray Olson agreed to terminate the Olson Motor Company franchises and released each of the three GM divisions from all claims.

Plaintiffs brought this action against GM and GMAC under the Dealer's Day in Court Act ¹ and federal antitrust law alleging that GM failed to provide adequate assistance or advice to help Ray Olson manage his dealership which resulted in its failure. Plaintiffs argue that the failure of Olson Motor was a direct result of GM's conduct in dictating the capital structure and financing needs of Olson Motor. Plaintiffs further claim that GMAC actively participated in this scheme through its financing arrangements and subsequent impoundment of plaintiffs' automobile inventory.

Prior to trial, GM and GMAC filed motions for summary judgment arguing that the releases signed by Ray Olson acted to absolve GM and GMAC of any liability. The district court ² on April 17, 1981, denied the motions and concluded that the validity and effect of the releases were issues for trial. The court also refused to grant summary judgment on the issue of whether GM could be held liable for the acts of GMAC, holding that the question of agency was one for jury resolution. Additionally, the court held that GMAC was not independently liable under the Dealer's Act because GMAC was not a party to the franchise agreement. The court held that GMAC could be held liable only upon a finding by the jury of an agency relationship between GM and GMAC.

The case proceeded to trial and on August 12, 1981, at the close of plaintiffs' case the district court dismissed Ray and Donna Olson as plaintiffs on the grounds that they lacked standing to sue. The jury returned a special verdict form and found that GM failed to act in good faith in terminating Olson's franchise but that the bad faith action was not the proximate cause of plaintiff's damages. Further, the jury found that Ray Olson had released GM from all claims brought in the present action. The jury also concluded that GMAC was acting as the agent of GM in repossessing the automobile inventory and that that bad faith conduct caused plaintiff's damages in the amount of $558,530.00.

The district court on the basis of the jury's findings entered judgment for defendants. The court explained its ruling in a memorandum dated January 4, 1982. The court held that the jury's finding that GMAC acted as GM's agent mandated the conclusion that plaintiff's release of GM acted also to release GMAC.

Plaintiffs appeal asserting the following: (1) that GMAC is independently liable under the Dealer's Act; (2) that the release of GM did not act to release GMAC; (3) that plaintiff is entitled to a new trial against GM based on a change of law; and (4) that Ray Olson had standing to sue under the Dealer's Act. GMAC filed a cross-appeal seeking additional relief only in the event of our reversal of the district court's judgment. For the reasons set forth in this opinion we affirm the judgment of the district court and accordingly decline to reach the issues raised by the cross-appeal.

I. GMAC's independent liability

Plaintiffs argue that GMAC is an "automobile manufacturer" within the meaning of the Dealer's Act and is thereby independently liable under the Act for its bad faith repossession of plaintiffs' inventory. GMAC is a wholly owned subsidiary of GM which finances the distribution of automobiles manufactured by GM. Plaintiffs assert that GM had the ability and means to control GMAC's actions and thus, GMAC should be subject to the Dealer's Act. To hold otherwise, plaintiffs reason, would allow GM to do indirectly through GMAC what it could not do directly under the Act.

An "automobile manufacturer" is defined in 15 U.S.C. Sec. 1221(a) as

any person, partnership, corporation, association, or other form of business enterprise engaged in the manufacturing or assembling of passenger cars, trucks, or station wagons, including any person, partnership, or corporation which acts for and is under the control of such manufacturer or assembler in connection with the distribution of said automotive vehicles.

The issue of whether a finance company is an "automobile manufacturer" within section 1221(a) is unresolved. ³ The district court did not address this question. It determined that GMAC could not be held independently liable under the Act because GMAC was not a party to a franchise agreement as required by section 1221(b). We agree with the district court's ruling as to section 1221(b) and decline to decide the question of whether a finance company can be an automobile manufacturer under section 1221(a).

Section 1221(b) states:

(b) The term "franchise" shall mean the written agreement or contract between any automobile manufacturer engaged in commerce and any automobile dealer which purports to fix the legal rights and liabilities of the parties to such agreement or contract.

Courts have held that one not a party to the franchise agreement cannot be liable under the Dealer's Act. Marquis v. Chrysler Corp., 577 F.2d 624, 629 (9th Cir.1978); Stansifer v. Chrysler Motors Corp., 487 F.2d 59, 63-64 (9th Cir.1973); York Chrysler-Plymouth, Inc. v. Chrysler Credit Corp., 447 F.2d 786, 791 (5th Cir.1971). Thus, even if GMAC were an "automobile manufacturer" under the Act, without more, it could not be independently liable because it was not a party to the franchise.

A party may be held liable under the Act "notwithstanding it is not a party to the franchise if the party contracting with the dealer is the manufacturer's agent." Marquis v. Chrysler Corp., supra, 577 F.2d at 630; Sherman v. British Leyland Motors, Ltd., 601 F.2d 429, 443 n. 23 (9th Cir.1979). Therefore, the finding by the jury that GMAC acted as GM's agent when it repossessed the inventory is a sufficient basis for GMAC's liability under the Act.

GMAC challenges the jury's finding of an agency relationship between GM and GMAC as it pertains to GMAC's liability. GMAC argues there is no evidence that GM ordered GMAC to repossess Olson Motor's inventory. However, such direct evidence is not necessarily required. The evidence, when weighed in the light most favorable to the jury verdict supports a finding of an agency relationship between GM and GMAC. McGowne v. Challenge-Cook Bros., Inc., 672 F.2d 652, 655 (8th Cir.1982).

Testimony was introduced at trial to show that GM influenced Ray Olson to finance his business through GMAC. Ray Olson testified that GM officials met with GMAC officials to discuss the capital needs of Olson Motor Company. Further, GMAC's branch manual mandates that GMAC notify GM of its intent to repossess a GM dealer's inventory. Although these facts were disputed by GM we cannot say that the jury verdict was unsupported by the evidence. McKnelly v. Sperry Corp., 642 F.2d 1101, 1105 (8th Cir.1981). Accordingly, we must view GMAC as the agent of GM on the date GMAC repossessed Olson Motor's inventory.

II. Effect of...