Pearson v. Ford Motor Co.

• Decision Date: 14 April 1997
• Docket Number: No. 96-1066,96-1066
• Citation: 694 So.2d 61
• Parties: 22 Fla. L. Weekly D967 Gary J. PEARSON, Individually and on Behalf of the State of Florida and the Florida Department of Highway Safety and Motor Vehicles for the Use and Benefit of Gary J. Pearson, Appellant, v. FORD MOTOR COMPANY, Ford Motor Credit Company, Ford Leasing Development Company, Fort Walton Beach Lincoln-Mercury, Inc., and Beal Parkway Lincoln-Mercury, Inc., Appellees.
• Court: Florida District Court of Appeals

Page 61

694 So.2d 61

22 Fla. L. Weekly D967

Gary J. PEARSON, Individually and on Behalf of the State of Florida and the Florida Department of Highway Safety and Motor Vehicles for the Use and Benefit of Gary J. Pearson, Appellant, v. FORD MOTOR COMPANY, Ford Motor Credit Company, Ford Leasing Development Company, Fort Walton Beach Lincoln-Mercury, Inc., and Beal Parkway Lincoln-Mercury, Inc., Appellees.

No. 96-1066.

District Court of Appeal of Florida First District.

April 14, 1997.

Rehearing Denied May 28, 1997.

Steven B. Bauman and James W. Grimsley of Smith, Grimsley, Bauman, Pinkerton, Petermann, Saxer & Wells, Fort Walton Beach; Kenneth L. Funderburk of Funderburk, Day & Lane, Phenix City, AL, for appellant.

John H. Fleming, Patricia B. Cunningham, and Ann G. Fort of Sutherland, Asbill & Brennan, Atlanta, GA; Bruce A. McDonald of McDonald, Fleming, Moorhead & Ferguson, Pensacola, for appellees.

WOLF, Judge.

Gary Pearson appeals a final order granting final summary judgment on all counts of a ten-count complaint in favor of appellees, Ford Motor Co. (Ford), Ford Motor Credit Co. (Ford Credit), Ford Leasing Co. (Ford Leasing ), and Ft. Walton Beach Lincoln-Mercury, Inc. (FWBLM). We that find material issues of fact exist precluding summary judgment as to the counts alleging breach of contract, fraud, conversion, trespass, and breach of good faith. We, therefore, reverse the order regarding these counts, but affirm as to the remaining counts of interference with corporate governance (lender liability and fraud), breach of fiduciary duty of lender liability, and violations of the Florida Automobile Dealers' Day in Court Act (Florida ADDA) ¹.

FACTS

Gary J. Pearson is an African American who once was president, operator, and shareholder of FWBLM. This action arises from a number of agreements between Ford and appellant, as well as agreements between appellant and FWBLM, regarding a car dealership. As part of its efforts to increase the number of minority owners, Ford operates a dealer development program in which it assists minorities in acquiring and operating dealerships. Appellant was already employed by Ford when he filed a prospective dealer application in February 1983. Pearson and Ford entered an agreement for Pearson to participate in the dealer development program on July 12, 1983. Ford provided $320,000.00 in capital for the new dealership, and Pearson placed $80,000 in escrow for six months. During the initial six months, Pearson would operate the dealership as a salaried employee of FWBLM.

On February 1, 1984, Pearson entered into a dealer development agreement with Ford and a management agreement with FWBLM. The dealer development agreement and the management agreement were terminable at will by either party with proper notice. The FWBLM board of directors was made up of Pearson and three individuals appointed by Ford. Pearson was selected to be president. Pursuant to the dealer development agreement, Ford received 1,600 shares of convertible preferred stock in FWBLM, and Pearson received 800 shares of common stock (from his $80,000 in escrow). The agreement provided that if the dealership was profitable, a portion of Pearson's share of the profits would be used to gradually purchase Ford's preferred stock in FWBLM and convert it into common stock. However, Pearson could purchase the stock only from the profits, not with any other funds. Under this plan, if the dealership was profitable under his management, Pearson would eventually own the dealership. See Pearson v. Ford Motor Co., 865 F.Supp. 1504, 1506 (N.D.Fla.1994), aff'd, 68 F.3d 1301 (11th Cir.1995).

Each year, starting in 1983 (prior to Pearson's ownership), FWBLM entered into sales and service agreements with Ford to sell Mercury and Lincoln models. The dealership was profitable in 1984, 1985, and 1986. Pearson acquired 79% of the total stock in FWBLM by the end of 1986. However, by 1988, the dealership had lost so much money that Pearson's ownership interest had declined to 34 percent of the total stock. The dealership continued to incur operating losses in 1989 and 1990.

Originally, the dealership was operated from a facility leased from the previous Lincoln-Mercury dealer. Upon expiration of this lease in 1988, the dealership relocated onto a site on Beal Parkway. Defendant Ford Leasing purchased the land, constructed the buildings, and leased the site to FWBLM. It was around this time when disputes began to arise between appellant and appellees. Ford provided the dealership with more than one million dollars in additional capitalization during the time Pearson operated it. Because of these losses, Pearson's common stock in FWBLM had no value as of the end of 1989 until the time he was terminated.

The board of directors of FWBLM voted on February 26, 1991, to terminate Pearson as president of FWBLM and operator/manager of the dealership. FWBLM provided no written notice prior to the termination of the management agreement. At the same time, Ford terminated the dealer development agreement. FWBLM continued its operations until its assets were purchased by Beal Parkway Lincoln-Mercury, Inc. in October 1991.

Pearson filed suit in federal court, alleging violations of state and federal law. Pearson, supra. The federal courts granted summary judgment, finding that appellant had no standing under the federal Automobile Dealer's Day in Court Act because appellant was not a dealer under the federal act. The federal court refused to consider the supplemental state claims.

Pearson filed a ten-count complaint in the first judicial circuit court on January 27, 1995, against Ford, FWBLM, Ford Leasing Development Co., Ford Motor Credit, and Beal Parkway Lincoln-Mercury. The trial court granted summary judgment as to all counts. A final judgment was entered as to all defendants except Beal Parkway Lincoln-Mercury. The parties stipulated that if, after appeal, there were no causes of action remaining against the Ford defendants in which there was a possibility of injunctive relief, Pearson would dismiss Beal Parkway Lincoln-Mercury as a defendant. This appeal followed.

The trial court correctly found that counts II-IV, interference with corporate governance (lender liability), interference with corporate governance (fraud), and breach of fiduciary duty (lender duty), were barred by the statute of limitations. The acts alleged supporting these counts all occurred at least four years prior to the date the complaint was filed. §§ 95.11, 95.031, Fla.Stat. (1995). We affirm the order as to these counts without further comment.

FLORIDA ADDA

We also affirm summary judgment as to count IX of the complaint, violation of the Florida ADDA. We agree with the trial court's finding that appellant was not a "motor vehicle dealer" under the Florida ADDA. Appellant alleges violation of section 320.641, unfair cancellation of franchise agreements; section 320.645, restriction upon ownership of dealership by licensee; section 320.695, injunction; and section 320.697, civil damages. Section 320.641 ² requires a licensee, in this case Ford, to give written notice to the Florida Department of Highway Safety & Motor Vehicles (DHSMV) and the "motor vehicle dealer" when it intends to discontinue or modify a franchise agreement at least 90 days prior to the effective date of the change and give the reasons for the change. Appellant claims that the management agreement and dealership development agreement constitute "franchise agreements" under the definitions of the Florida ADDA, and that he is the "motor vehicle dealer" under the statutory definitions. Unfortunately, the statutory definitions are circular in that a motor vehicle dealer is one who sells pursuant to a franchise agreement, and a franchise agreement is a contract between a manufacturer and a "motor vehicle dealer." In section 320.60, "motor vehicle dealer" is defined as

"any person, ³ firm, or corporation who, for commission, money or other things of value, repairs or services motor vehicles or used motor vehicles pursuant to an agreement as defined in subsection (1), or sells, exchanges, buys, or rents, or offers, or attempts to negotiate a sale or exchange of any interest in, motor vehicles or who is engaged wholly or in part in the business of selling motor vehicles, whether or not such motor vehicles are owned by such person, firm, or corporation." ⁴

§ 320.60(11)(a), Fla.Stat. (1995).

It is undisputed that appellant sold motor vehicles, and that he did so pursuant to the management agreement and the sales and service agreements. However, appellees argue that (1) the dealership, not appellant, was the dealer for purposes of the notice requirement; and (2) the dealer development agreement and the management agreement are not franchise agreements as defined by subsection section 320.60:

"Agreement" or "franchise agreement" means a contract, franchise, new motor vehicle franchise, sales and service agreement, or dealer agreement or any other terminology used to describe the contractual relationship between a manufacturer, factory branch, distributor, or importer, and a motor vehicle dealer, pursuant to which the motor vehicle dealer is authorized to transact business pertaining to motor vehicles of a particular line-make.

§ 320.60(1), Fla.Stat. (1995). The management agreement is not between Ford and appellant, but rather between FWBLM and appellant. FWBLM is not a manufacturer, factory branch, distributor, or importer. The management agreement cannot be an "agreement" under the statutory definitions, and its termination did not require notice under the statute.

Section 320.699 states in relevant part:

Administrative hearings and adjudications; procedure.--

(1) A motor vehicle dealer, or person with entitlements to or in a motor vehicle dealer, who is directly and adversely affected by the action or conduct of an applicant or licensee which is alleged to be in violation any provision...