Salco Corp. v. General Motors Corp., Buick Motor Div.

• Decision Date: 14 May 1975
• Docket Number: No. 73-1842,73-1842
• Parties: 1975-1 Trade Cases 60,322 SALCO CORPORATION, formerly known and doing business as Denver Buick, Inc., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, BUICK MOTOR DIVISION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 567

517 F.2d 567

1975-1 Trade Cases 60,322

SALCO CORPORATION, formerly known and doing business as Denver Buick, Inc., Plaintiff-Appellant, v. GENERAL MOTORS CORPORATION, BUICK MOTOR DIVISION, Defendant-Appellee.

No. 73-1842.

United States Court of Appeals Tenth Circuit.

Submitted July 9, 1974.

Decided May 14, 1975.

James C. Bull, Denver, Colo. (Quiat, Bucholtz & Bull, P. C., Denver, Colo., of counsel), for plaintiff-appellant.

Arthur E. Otten, Jr., Denver, Colo. (Davis, Graham & Stubbs, Richard W. Daily, Denver, Colo., Thomas W. Watkins, Julius L. Russu, Detroit, Mich., Ross L. Malone, New York City, of counsel), for defendant-appellee.

Before MOORE ^*, HILL and DOYLE, Circuit Judges.

MOORE, Circuit Judge:

This appeal arises from an action instituted by Salco Corporation, formerly doing business as Denver Buick, Inc. ¹ (hereinafter referred to as "Denver Buick") against General Motors Corporation, Buick Motor Division (hereinafter referred to as "General Motors"). In its complaint Denver Buick alleged in substance that General Motors had forced it to terminate its dealership franchise agreement by failing to act in "good faith", as required by the Automobile Dealer Franchise Act (ADFA), 15 U.S.C. §§ 1221-25 (1970). ² Denver Buick also alleged violations of Sections 1 and 2 of the Sherman Antitrust Act, 15 U.S.C. §§ 1, 2 (1970). The antitrust claims involved, respectively, the location clause in the franchise agreement between the parties and an alleged conspiracy to monopolize the Denver market in the sale of Buick and Opel automobiles. Other claims asserted in the complaint were dismissed and are not involved in this appeal.

Without written opinion, the district court granted a defense motion to dismiss Denver Buick's Sherman Antitrust Act claims for failure to state a claim upon which relief can be granted. After extensive depositions of key witnesses for both parties had been taken, lengthy affidavits and memoranda of law submitted, voluminous exhibits marked and a pre-trial conference held, a motion for summary judgment was made by General Motors. The court below granted General Motors' motion for summary judgment on Denver Buick's ADFA claim for damages (the First claim for relief in the complaint). Denver Buick appeals from the final judgment of dismissal.

Appellant Denver Buick had been a Buick franchise new car dealer for 47 years in the Denver metropolitan area. For many years it had operated its Buick dealership at 700 Broadway in Denver. The building at this location, however, had become somewhat dilapidated and difficult and costly to maintain. The real estate on which it was built (real estate which Denver Buick owned) had substantially appreciated in value and was capable of being used more profitably than as a new car showroom. As a result, in late 1967 or early 1968, Denver Buick considered selling its facilities at that address and moving its dealership to a different location.

In early 1968 General Motors announced that it would conduct a market study of the Denver metropolitan area in order to determine the best areas in Denver for its dealerships from the viewpoint of the interests of both dealers and General Motors. In December of that year General Motors informed Denver Buick that the survey indicated that there were two areas in Denver, one in the north (the Northglenn area) and one in the south (the Littleton area) in which Buick was not represented by a dealership. Denver Buick was offered its choice. Denver Buick rejected the Northglenn area but said that it would "be willing to relocate in the Littleton-Englewood area" at such time as it had sold or leased its present property. In the meantime, it said that it would attempt to find a suitable site or facility in that area. However, Denver Buick was apparently unable to find a Littleton site for the price it was willing to pay or which it deemed suitable. Denver Buick calculated that it would be able to spend $700,000 for land and fixtures on the basis of a 600 unit projected annual new car market in Littleton.

For a year and a half, Denver Buick continued to seek sites in the Littleton area. In September 1969 Denver Buick requested for the first time that it be permitted to forsake Littleton and to relocate on Havana Street in suburban Denver. It claimed that relocation to this address could be accomplished for about half the investment that Denver Buick would have to make in Littleton. Denver Buick insisted that the Havana Street location was exemplary in every way. It reported that, amongst other things, the location had sufficient acreage, proper zoning, a good traffic flow and excellent growth prospects. In spite of Denver Buick's representations, General Motors refused to consent to the Havana Street move.

Denver Buick continued, with General Motors' assistance, to look for a site in Littleton and to do business at the 700 Broadway address. General Motors, through its zone representatives, had agreed that Denver Buick could remain at its old location until that property could be disposed of. Moreover, on July 20, 1970, General Motors offered Denver Buick a new five-year dealer franchise at its 700 Broadway location. Franchises are normally offered for a five-year period and the franchise under which Denver Buick had been operating was scheduled to expire on October 31, 1970. Thus, Denver Buick could have continued a Buick dealership "on (its) locations and premises."

In September 1970 Denver Buick, together with other Buick dealers, met to sign the new agreement. Denver Buick found the renewal agreement to be satisfactory, signed it and returned it to General Motors. ³

Thereafter, Denver Buick entered into a contract with Blue Cross-Blue Shield medical corporation for the sale of the 700 Broadway property. The sale for $1,750,000 was favorable to Denver Buick, resulting in a profit to it of some $850,000. After Denver Buick advised General Motors of the sale, several meetings were held at which Denver Buick reiterated its request to move to Havana Street, a request which was again denied. Finally, General Motors informed Denver Buick that it had forty-five days to find a suitable site in Littleton. General Motors wanted a Buick dealer in the Littleton area because virtually every make of automobile was represented there except Buick. ⁴ According to Denver Buick, a week after this ultimatum was delivered, General Motors revised its position and gave Denver Buick three days to advise General Motors of its dealership intentions.

On October 19, 1970, Denver Buick itself took the initiative and in a letter signed by Harold Cohan, President, wrote to General Motors as follows:

Notice is hereby given of the termination of the Denver Buick agreement with General Motors. We have not received our 1971 selling agreement.

Denver Buick Incorporated has sold its physical plant on 7th and Broadway, Denver, Colorado. My father and I desired, however, to locate a Buick agency on South Havana, which would not conflict under the agreement, with any other Buick agency, and which was more than five and one-half miles away from any other Buick agency.

But for some reason, Buick Motor Division and its agents refused to give us and our corporation this permission, making such termination inevitable.

Our corporation has been a Buick dealer since 1924, and we cannot tell you how dismayed we were with your attitude and autocratic policy.

Thirty-day period waived on termination.

As a consequence of this letter, the relationship between General Motors and Denver Buick terminated. ⁵

I.

Since only undisputed facts may be considered in determining whether summary judgment may properly issue as a matter of law, the salient facts will be noted. These facts must be appraised in light of Judge Pickett's admonition that: "A cause of action exists in favor of the dealer only when the unfair and inequitable conduct of the manufacturer amounts to coercion or intimidation." Hanley v. Chrysler Motors Corp., 433 F.2d 708, 712 (10th Cir. 1970).

Denver Buick, not General Motors, elected to terminate its franchise. General Motors had shown its willingness and desire to have Denver Buick continue as a franchise dealer by offering a five-year renewal agreement at its then location.

The renewal was not conditioned upon Denver Buick moving from its premises at 700 Broadway. To the contrary the renewal franchise as offered, was to be at 700 Broadway.

The decision to sell and the sale of the 700 Broadway property were made solely by Denver Buick without any instigation, coercion or threat by General Motors in fact, without General Motors' knowledge. The sale was made by Denver Buick to advance its own business interests.

The reason ascribed for Denver Buick's termination election was the refusal of General Motors to give its permission for Denver Buick to relocate on Havana Street, thus, according to Denver Buick "making such a termination inevitable." However, Denver Buick itself had made termination inevitable by selling its property and by the necessity of discontinuing a Buick agency at that location.

The trial court in its opinion meticulously listed the material facts as to which it found there were no genuine issues and upon which it based its decision to grant summary judgment. A brief review thereof demonstrates a solid foundation for its decision.

1. Continuance of the "use of the land (700 Broadway) for an automobile dealership was highly questionable as a matter of good business judgment." District Court Opinion at 3 (R. 369).

2. General Motors' survey of the Denver area for new or relocated dealerships indicated two "best potential" locations, Northglenn and Littleton. Denver Buick was offered its choice and chose Littleton.

3. Unable to find a site in Littleton at a price it was willing to pay or which it believed to be suitable, Denver Buick asked for permission to move to Havana Street, which permission was refused.

4. On ...