Ron Tonkin Gran Turismo, Inc. v. Wakehouse Motors, Inc.

• Jurisdiction: Oregon
• Court: Oregon Court of Appeals
• Writing for the Court: Before GILLETTE, P. J., SCHWAB; GILLETTE
• Citation: Ron Tonkin Gran Turismo, Inc. v. Wakehouse Motors, Inc., 46 Or.App. 199, 611 P.2d 658 (Or. App. 1980)
• Decision Date: 19 May 1980
• Docket Number: No. A7609-13461,A7609-13461
• Parties: , 1980-2 Trade Cases P 63,466 RON TONKIN GRAN TURISMO, INC., Respondent, v. WAKEHOUSE MOTORS, INC., and Ernest Wakehouse, Appellants, v. Ron TONKIN, Third Party Defendant. ; CA 14531.

Page 658

611 P.2d 658

46 Or.App. 199, 1980-2 Trade Cases P 63,466

RON TONKIN GRAN TURISMO, INC., Respondent, v. WAKEHOUSE MOTORS, INC., and Ernest Wakehouse, Appellants, v. Ron TONKIN, Third Party Defendant.

No. A7609-13461; CA 14531.

Court of Appeals of Oregon.

Argued and Submitted March 10, 1980.

Decided May 19, 1980.

Miles Sweeney, Portland, argued the cause for appellants. With him on the briefs were John R. Gilbertson, David J. Sweeney, Gilbertson, Brownstein, Sweeney, Kerr & Grim, Portland.

Roger Tilbury, Portland, argued the cause for respondent, Ron Tonkin Gran Turismo, Inc. With him on the brief was Reiter, Bricker, Zakovics & Querin, Haessler, Stamer & Tilbury, Portland.

Before GILLETTE, P. J., SCHWAB, C. J., and CAMPBELL, JJ.

GILLETTE, Presiding Judge.

Plaintiff brought this action alleging that defendant induced Fiat Distributors, Inc., (Fiat) the United States distributor of Fiat, not to grant plaintiff a franchise to sell Fiat automobiles. The complaint alleged interference with both an actual contract and a prospective contract. The trial court, sitting without a jury, made specific findings of fact and conclusions of law. It entered judgment for the plaintiff for $222,615 on the prospective contract count only, finding that the defendant intentionally interfered with a contemplated relationship between plaintiff and Fiat for improper purposes. Defendant appeals. We reverse.

Defendant Wakehouse is the president of Wakehouse Motors Inc., the sole dealer of Fiat automobiles, parts and service in Portland. During 1974, plaintiff, also a Portland car dealer, discussed with Fiat personnel the possibility of entering into a written franchise agreement whereby plaintiff would sell Fiat automobiles to the public and provide parts and service to prospective purchasers. A tentative agreement was reached between plaintiff and the regional representatives of Fiat. Plaintiff, after taking certain steps, was assured by the regional representatives that it would be granted the franchise. Plaintiff submitted a written order to Fiat for automobiles and parts and a bank check for the parts.

The defendants were informed by one of Fiat's regional representations in October, 1974, that Fiat was looking for an additional dealer in the Portland area because of the low sales percentage for Fiats in Portland as compared with other areas of the country. They were also told of plaintiff's application. During that same month, Wakehouse flew to New Jersey to meet with the executive officers of Fiat distribution in the United States. Thereafter, a regional representative was told by Fiat headquarters to delay processing of plaintiff's application for a franchise. Wakehouse was given a 90 day trial period during which he was to meet certain sales quotas. Fiat then extended that period another 90 days. Plaintiff was told of the moratorium on processing his application and its check was returned to it. At some point in 1975, Fiat decided not to pursue the appointment of an additional dealer in Portland.

In its complaint, plaintiff alleged that defendants made personal contact with Fiat in order to dissuade Fiat from entering into a franchise agreement with plaintiff. Plaintiff claimed that defendants, concerned with the effect the proposed franchise would have on their profits, maliciously and intentionally sought to prevent such franchise from being granted. Plaintiff contends that, in seeking this end, defendants employed improper means and/or acted in illegal restraint of trade by:

"1) Attempting to monopolize the sale of Fiat automobiles in the City of Portland;

"2) Attempting to monopolize the sale of Fiat parts in the City of Portland;

"3) Monopolizing the sale of Fiat automobiles in the City of Portland;

"4) Persuading Fiat Distributors to cancel its plans to grant plaintiff a franchise agreement so that defendants could maintain a high profit margin for each sale of Fiat automobiles;

"5) Joining with other Fiat automobile dealers to oppose and boycott the appointment of new dealers in the Portland area;

"6) Attempting to and succeeding in restricting the supply of Fiat automobiles available for sale to the public in the City of Portland;

"7) Attempting to and succeeding in restricting the supply of Fiat parts available for sale to the public in the City of Portland;

"8) Restraining trade in the sale of Fiat automobiles and parts in the City of Portland."

The trial court found that the defendants intentionally contacted the executive officers of Fiat to dissuade them from granting the written franchise to plaintiff; that, as a result, Fiat refused to grant plaintiff the franchise; and that the defendants' purpose in personally contacting Fiat was to maintain their position as the sole dealer of Fiat cars, parts and services in Portland and, thus, to assure that their pricing policies would remain free of any competitive forces. On that basis, the court concluded that the defendants' intentional interference with the prospective contract between plaintiff and Fiat was motivated by improper and illegal purposes and granted judgment for plaintiff.

Defendants raise numerous assignments of error on appeal. In view of the disposition we make of this case, we reach only the first, which concerns the applicability of res judicata and collateral estoppel.

Defendants claim that this action is barred by principles of res judicata and/or collateral estoppel by virtue of a previous lawsuit brought by plaintiff in Federal District Court in Oregon. That action was an anti-trust suit brought by plaintiff against Fiat Distributors and defendant, Wakehouse Motors.

Plaintiff, in its federal action, alleged that Fiat and Wakehouse conspired to act in restraint of trade, attempted to and did monopolize the trade of Fiat automobiles in the Portland area, and attempted to force on plaintiff an illegal tying arrangement, ¹ all in violation of the Sherman Anti-Trust Act, 15 U.S.C. §§ 1-2, and the Clayton Act, 15 U.S.C. § 12 et seq. Plaintiff claimed that the defendants, acting together, sought to and in some instances did:

"a) Deprive and block plaintiff from obtaining a supply of Fiat automobiles and parts;

"b) Eliminate, preclude and restrict price competition in the metropolitan Portland area for the purchase of Fiat vehicles and parts;

"c) Eliminate competition of other automobiles formerly sold by plaintiff (Saab and Honda) as a precondition to the sale of Fiat automobiles by means of tie-in restrictions;

"d) Erect, establish and maintain a boycott against plaintiff."

After making specific findings and conclusions of law, a federal magistrate recommended that the district court grant summary judgment for defendants. The magistrate found that the defendants' actions did not constitute a monopoly of the relevant product market, an attempt to monopolize that market or a conspiracy to monopolize. The magistrate concluded that the refusal of Fiat to sell to plaintiff because of their understanding with Wakehouse did not amount to an illegal or unreasonable restraint of trade but rather was a proper exclusive dealership under the anti-trust laws. Additionally, the magistrate found that plaintiff failed to establish the existence of an illegal tying arrangement or price fixing. The magistrate's decision was affirmed by a district court judge after a de novo review. That decision is currently under appeal to the Ninth Circuit Court of Appeals.

Res judicata applies not only to every claim included in the pleadings but also to every claim which could have been alleged under the same "aggregate of operative facts which compose a single occasion for judicial relief." Taylor v. Baker, 279 Or. 139, 144, 566 P.2d 884, 888 (1977); Dean v. Exotic Veneers Inc., 271 Or. 188, 194, 531 P.2d 266 (1975). Collateral estoppel applies "only to material issues or determinative facts which were actually or necessarily adjudicated in the prior action." Jones v. Flannigan, 270 Or. 121, 124, 526 P.2d 543, 545 (1974).

We turn first to the claim that this suit is barred by principles of res judicata. There is no question that the claim before us now arises from the same set of operative facts as the federal claim. Plaintiff would normally have been expected to raise both claims in the same lawsuit. However, the claim of interference with a prospective contract or business relationship is a claim arising under state law and a question arises as to whether plaintiff could have pursued it in federal court.

The state claim has no independent federal basis. There is no diversity of citizenship between the parties. However, the federal court did have the power to decide the matter under the doctrine of pendent jurisdiction. Pendent jurisdiction, "in the sense of judicial power," exists whenever there is a federal claim and a state claim which constitute "but one constitutional case." Mine Workers v. Gibbs, 383 U.S. 715, 725, 86 S.Ct. 1130, 1138, 16 L.Ed. 218 (1966). The requirements of pendent jurisdiction are that the federal claim must have substance "sufficient to confer subject matter jurisdiction on the court" and the state and federal claims "must derive from a common nucleus of operative fact" so that a plaintiff would ordinarily have been "expected to try them all in one judicial proceeding." Id., at 725, 86 S.Ct. at 1138. See also Klaus v. Hi-Shear Corporation, 528 F.2d 225 (9th Cir. 1975). Plaintiff's claim fits within these parameters.

A difficulty arises, however, in determining whether or not the federal court would have exercised its discretion to hear the state claim. Pendent jurisdiction is always a matter of discretion and not a right of the parties. Mine Workers v. Gibbs, supra, 383 U.S. at 726, 86 S.Ct. at 1139. In this case, the federal claim was decided on a motion for summary judgment before trial on the merits. The federal courts have consistently held that, where the federal claim is dismissed on a motion for...