Stone Motor Co. v. General Motors Corp.
| Decision Date | 10 June 2002 |
| Docket Number | No. 01-3519.,01-3519. |
| Citation | 293 F.3d 456 |
| Parties | STONE MOTOR COMPANY, Appellant, v. GENERAL MOTORS CORPORATION, Appellee. |
| Court | U.S. Court of Appeals — Eighth Circuit |
John D. Beger, argued, Rolla, MO (Bryan D. Scheiderer, Rolla, MO, on the brief), for appellant.
Jeffrey J. Jones, argued, Columbus, OH (J. Todd Kennard, Columbus, OH, and David M. Harris and Dawn M. Johnson, St, Louis, MO, on the brief), for appellee.
Before: BOWMAN, RILEY, and MELLOY, Circuit Judges.
The present dispute stems from a 1995 Chevrolet-Geo Dealer Sales and Service Agreement between franchisor General Motors Corporation (GM) and franchisee Stone Motor Company (Stone Motor). In 1997, after two years of disappointing vehicle sales, Stone Motor elected to sell its dealership and franchise. According to Stone Motor, the dealership failed because GM provided an insufficient number of vehicles and withheld better-selling models. In 1999, approximately two years after the sale, Stone Motor instituted the present suit against GM alleging fraud, breach of contract, prima facie tort, and violation of the Missouri Motor Vehicle Franchise Practices Act, MO. REV. STAT. § 407.825.1 et seq. (MVFPA).
GM originally moved to dismiss all claims under Federal Rule of Civil Procedure 12(b)(6). The district court granted GM's motion to dismiss regarding the fraud, tort, and statutory claims. Thereafter, GM filed an answer in which it asserted a defense based on a written release. Stone Motor referenced the release in the original complaint, but GM did not have a copy of the release when filing the answer. Following receipt of the release through discovery, GM moved for judgment on the pleadings. Before the district court ruled on GM's motion for judgment on the pleadings, GM filed a motion seeking summary judgment on the remaining claim for breach of contract. GM reasserted the release defense in its summary judgment motion. The district court granted summary judgment without addressing the validity of the release.
Stone Motor appeals the district court's dismissal of the statutory claims and grant of summary judgment, but not the dismissal of the fraud or prima facie tort claims. For the reasons discussed below, the grant of summary judgment and dismissal of statutory claims are reversed, and the case is remanded to the district court to conduct the factual findings necessary to determine the validity of the release.
In 1995 Stone Motor purchased a Cuba, Missouri, Chevrolet-Geo dealership and franchise. Prior to the purchase, Stone Motor received inflated historical sales data from the selling franchisee. Stone Motor purchased the dealership in reliance on this inflated data and based sales projections for its franchise application on this data. GM received and approved the franchise application without notifying Stone Motor that the historical figures were inflated. The failure to correct Stone Motor's own sales projections served as the foundation for Stone Motor's now-dismissed fraud claim. Although Stone Motor did not receive notice regarding the inflated data, GM did send a letter to Stone Motor advising that the dealership facilities were substantially larger than facilities for area dealerships having similar sales volume. In the letter, GM further advised that this heightened capacity would not create an entitlement to extra inventory.
On September 27, 1995, GM and Stone Motor executed an agreement and a separately signed, preamble document. The preamble document contained recitations that described the parties' general goals and objectives. The agreement recognized that GM had a duty to allocate vehicles among its various dealers and reserved to GM broad and sole discretion in the selection and allocation of vehicles to Stone Motor. The agreement did not articulate any quotas or impose on GM a duty to provide any particular mixture of vehicle models.
After commencing operations under the agreement, GM provided more vehicles to Stone Motor than it had provided to the prior franchisee. However, GM did not provide as many vehicles as Stone Motor desired. Further, as a percentage of the vehicles provided, GM did not provide trucks and sport utility vehicles at the levels desired by Stone Motor. Finally, Stone Motor identified instances wherein GM delayed in filling orders, refused to fill an order, or advised Stone Motor to refer a customer to a different GM dealer. As a result of the dealership's poor economic performance, Stone Motor elected to sell the dealership and franchise to a dealer in a nearby town. GM approved the sale of the franchise.
On July 14, 1997, at the closing for the sale of Stone Motor's dealership and franchise, Virgil Stone, individually and in his capacity as the president of Stone Motor, signed a release of all claims against GM. The release recited as consideration "the sum of One Dollar ($1.00) in hand paid by General Motors Corporation, Chevrolet Motor Division, a Delaware corporation, receipt of which is hereby acknowledged and other good and valuable consideration...". Virgil Stone was accompanied at the closing by two attorneys, his personal attorney as well as counsel for Stone Motor. Stone Motor alleges that no GM representative was present at the closing. The record is unclear regarding how the release arrived at the closing.
It is undisputed that Stone Motor executed the release and that all of Stone Motor's allegations relate to events that occurred prior to execution of the release. As such, there is no dispute that the release bars all of the present claims if the release is a valid contract. Stone Motor disputes the validity of the release based on theories of lack of consideration and economic duress.
Stone Motor asserts via affidavit that the recited $1.00 "peppercorn" was never paid and that no other valuable consideration was exchanged. GM argues that the parol evidence rule prevents the introduction of evidence to contradict the release's unambiguous recitation of consideration. GM further argues that, even if parol evidence were admissible, the approval of Stone Motor's sale of the franchise to the subsequent franchisee served as the "other good and valuable consideration" alluded to by the release. Stone Motor counters that the approval was granted prior to closing and comprised "past consideration" incapable of supporting the later-signed release.
Missouri contract law provides an exception to the parol evidence rule that allows parties to introduce extrinsic evidence to rebut recitations of consideration if the recitation is a "mere recitation" of fact, such as the acknowledgment of payment received, and is not a part of the terms of the contract itself. In CIT Group/Sales Fin., Inc. v. Lark, 906 S.W.2d 865 (Mo.Ct.App.1995), the Missouri Court of Appeals stated:
`[c]onsideration, or lack thereof, may always be shown by extrinsic evidence in a controversy between the original parties to an agreement even if the evidence tends to vary the consideration stated in the agreement.' This exception applies only to contracts in which the named consideration is a mere recital of a fact of something done, such as the acknowledgment of the receipt of a payment.
Id. at 868-69 (quoting Rose v. Howard, 670 S.W.2d 142, 145 (Mo.Ct.App.1984)) (other citations omitted). This Court has previously recognized and discussed Missouri's exception to the parol evidence rule:
... when the recital of a consideration in a written contract can be fairly regarded as a mere recital, or a statement of the receipt of money, then such recital may be explained by parol, and the actual consideration for the contract shown even though to do so may apparently contradict the recital in the contract. In this class of cases the recital as to the consideration is regarded in the same light as a receipt for money and may be explained, or even contradicted by parol; but, if the statement in a written contract in relation to the consideration shows upon its face that the expressed consideration is a part of the terms of the contract itself, then that part of the writing stands as any other part, and it cannot be contradicted, added to, nor subtracted from, by parol.
Roberts v. Browning, 610 F.2d 528, 535-36 (8th Cir.1979) (citing Fox Midwest Theatres, Inc. v. Means, 221 F.2d 173, 177 (8th Cir.1955), quoting from Pile v. Bright, 156 Mo.App. 301, 137 S.W. 1017, 1018 (1911)).
GM argues that the present recitation is not a "mere recitation" but rather comprises "a part of the contract itself." We disagree. The present recitation is precisely the type of inattentive "mere recitation" envisioned by the Missouri courts that fashioned the exception. Ezo v. St. Louis Smelting & Refining Co., 87 S.W.2d 1051, 1053 (Mo.Ct.App.1935) (). Here, GM and Stone Motor literally employed a "mere recital" by executing a release without specifically identifying the true value exchanged or the actual forbearance exercised by either party.
By contrast, in cases where the Missouri courts refused to apply the exception, the recited consideration was not analogous to a "receipt for money," Roberts, 610 F.2d at 536. For example, in Meyer v. Weber, 233 Mo.App. 832, 109 S.W.2d 702 (1937), the Missouri Court of Appeals refused to apply the exception to the parol evidence rule because the recitation of consideration was a promise of future, ongoing payment in exchange for the services of certain musicians. Such a recitation of consideration was a contract term rather than a mere recitation. Id. at 704-05. Similarly, the...
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