Strike Four, LLC v. Nissan N. Am., Inc.

Citation64 A.3d 936,164 N.H. 729
Decision Date12 April 2013
Docket NumberNo. 2012–193.,2012–193.
Parties STRIKE FOUR, LLC v. NISSAN NORTH AMERICA, INC.
CourtSupreme Court of New Hampshire

Holmes Law Offices PLLC, of Concord, (Gregory A. Holmes on the brief and orally), and McDowell & Osburn, P.A., of Manchester (Elizabeth M. Leonard on the brief), for the petitioner.

Bingham McCutchen LLP, of Boston, Massachusetts (William N. Berkowitz and another on the brief, and Mr. Berkowitz orally), for the respondent.

Baker Hostetler LLP, of Columbus, Ohio (Elizabeth A. McNellie on the brief), and Cullen Collimore PLLC, of Nashua (Brian J.S. Cullen on the brief), for the Association of Global Automakers, Inc., as amicus curiae.

Douglas, Leonard & Garvey, P.C., of Concord (Charles G. Douglas, III on the brief), for the National Automobile Dealers Association, and Peter J. McNamara, of Concord, by brief, for New Hampshire Automobile Dealers Association, as amici curiae.

CONBOY, J.

The respondent, Nissan North America, Inc. (Nissan), appeals a decision of the Superior Court (Vaughan, J.) vacating a decision of the New Hampshire Motor Vehicle Industry Board (Board) and ruling that RSA chapter 357–C (Regulation of Business Practices Between Motor Vehicle Manufacturers, Distributors and Dealers) renders unenforceable a provision of a written settlement agreement between Nissan and the petitioner, Strike Four, LLC, a Nissan dealer (Dealer). Nissan also appeals the superior court's ruling that it was entitled to neither specific performance of the settlement agreement nor attorney's fees. We affirm in part, vacate in part, and remand.

The trial court found, or the record supports, the following facts. On July 8, 2005, Nissan issued to the Dealer a notice of termination of its dealership franchise. The Dealer filed a protest with the Board (the 2005 protest). See generally RSA 357–C:7 (2009 & Supp.2012). The parties jointly moved to stay Board proceedings to allow for settlement negotiations. The Board granted this motion on October 12, 2005.

The settlement negotiations took place over two years, with both parties represented by counsel. On October 15, 2007, the parties entered into a settlement agreement that provided that the Dealer and Nissan would execute a new two-year term agreement, and the Dealer would withdraw its protest. The combined terms of the settlement agreement and the term agreement included relocation provisions (and a construction schedule for an exclusive Nissan sales facility), exclusivity provisions, and "Dealer Minimum Sales Performance" (MSP) requirements. The term agreement provided that if the Dealer failed to meet any of its obligations by the specified deadlines, or otherwise materially breached the agreements:

Dealer shall (a) within six (6) months after the relevant Term Agreement Deadline secure a buy/sell of its Nissan dealership assets to an unrelated third party acceptable to Nissan ... and (b) within twelve (12) months after the relevant Term Agreement Deadline, consummate the sale of its Nissan dealership assets ("First Standstill Period").
... In no event shall Dealer be authorized to conduct Nissan Dealership Operations after the expiration of the First Standstill Period.

If the Dealer failed to meet MSP requirements, the same six-month and twelve-month benchmarks applied, but the interval was called the "Second Standstill Period." The term agreement further provided that in the event of failure to meet MSP requirements, "Dealer shall be issued a twelve (12) month term agreement for the sole purpose of achieving sale of the Nissan dealership assets," and "failure to obtain Nissan's approval for such sale or transfer within this twelve-month period shall constitute good and due cause for termination." Both parties expressly agreed that the terms of the settlement agreement and the term agreement were "fair and reasonable," and waived any right to challenge its "legality or enforceability" under RSA chapter 357–C.

On December 10, 2008, and January 14, 2009, the parties executed amendments to the term agreement, which extended its expiration date—and the date by which the Dealer was required to achieve MSP requirements—to March 11, 2011. The first amendment reiterated many of the terms of the settlement and term agreements: if the Dealer failed to achieve its sales requirements by the revised date, it would sell the dealership assets to a qualified buyer within one year thereafter; the terms of the agreement were "fair and reasonable"; and the Dealer waived the right to protest the agreements' provisions, including under RSA chapter 357–C. Hereinafter, we refer to the 2007 settlement agreement, term agreement, and the amendments collectively as the "Agreement."

By letter dated November 12, 2010, Nissan advised the Dealer that it was "highly unlikely" that the Dealer would be able to fulfill its MSP obligations under the Agreement by the March 11, 2011 deadline and suggested that the Dealer "begin now to actively [look] for potential buyers" for the dealership's assets, a search with which Nissan offered to assist. Interpreting the November 12 letter as a notice of termination, the Dealer filed a protest with the Board on December 29, 2010 (the 2010 protest). The Dealer argued that the sales performance obligations under the Agreement were unreasonable, and challenged the enforceability of the Agreement's provisions requiring the Dealer to voluntarily divest itself of the dealership assets as inconsistent with the protections of RSA chapter 357–C. On February 3, 2011, Nissan filed a counter-protest, alleging that the Dealer's actions—including initiation of the 2010 protest challenging the enforceability of provisions contained in the Agreement, which Nissan had signed in reliance upon the Dealer's express agreement that the Dealer would not challenge its provisions—constituted bad faith conduct in violation of RSA 357–C:3, I (2009).

While these proceedings were pending before the Board, on March 14, 2011, Nissan notified the Dealer that it had not met the MSP requirements and was therefore obligated to secure a buyer for the dealership within six months (that is, by September 11, 2011) and to complete the sale by March 11, 2012. On August 8, 2011, Nissan again wrote to the Dealer to reiterate its "contractual obligation to divest of its Nissan dealership by March 11, 2012." As of September 11, 2011, the Dealer had not obtained a buyer for the dealership assets. By letter dated September 21, 2011, Nissan notified the Dealer of the material breach of the Agreement and called upon it to immediately present to Nissan an acceptable buyer, and to consummate the sale no later than March 11, 2012. Despite these notices, the Dealer did not sell the dealership assets.

On May 5, 2011, the Board held a hearing on the Dealer's 2010 protest and Nissan's counter-protest, at which both parties argued legal issues based upon their briefs, but neither party presented testimony or documentary evidence. On May 31, 2011, the Board dismissed the Dealer's protest and sustained Nissan's counter-protest. The Board found that both parties had entered into the Agreement in good faith and that Nissan had not cancelled or failed to renew the franchise agreement. It reasoned that the Agreement resolved a previous dispute, and therefore did not violate RSA 357–C:6 (2009), which provides that all agreements between a manufacturer and dealer are "subject to the provisions of the chapter, and provisions of such agreements which are inconsistent with this chapter shall be void as against public policy and unenforceable." See RSA 357–C:6. The Board specifically found that the Agreement did not deny the Dealer its right to file a termination protest if Nissan were to issue a new notice of termination. As to Nissan's counterprotest, the Board found that the Dealer's filing of the 2010 protest despite the waiver provisions of the Agreement constituted bad faith in violation of RSA 357–C:3, I. It also found that the Dealer's underperformance caused Nissan to suffer harm in the form of lost sales, but it did not award damages. The Board denied the Dealer's motion for rehearing on August 15, 2011.

On September 13, 2011, the Dealer appealed to the superior court. Nissan filed an answer and a two-count counterclaim, seeking: (1) recovery of its attorney's fees and costs pursuant to RSA 357–C:12, X (2009) based upon the Board's finding of the Dealer's bad faith; and (2) specific performance of the dealer's contractual obligation to sell the dealership assets by March 12, 2012. Nissan moved for summary judgment on both claims on January 4, 2012. The Dealer had not yet responded to the motion when the superior court issued its order, dated January 31, 2012, vacating the Board's decision, granting the Dealer's petition, denying Nissan's motion for summary judgment, and dismissing Nissan's counterclaims. The court denied Nissan's motion for reconsideration and this appeal followed.

On appeal, Nissan first argues that the superior court erred in declining to give effect to the Dealer's express waiver of its right to challenge either the legality of the Agreement or the reasonableness of the MSP requirements, asserting that the waiver was freely and voluntarily given, that it was based upon valuable consideration, and that Nissan had relied to its detriment upon the waiver. Nissan further contends that the superior court misconstrued RSA chapter 357–C when it read the statute to invalidate certain provisions of the Agreement, and that such a reading of the statute is inconsistent with both the statutory purpose and New Hampshire's public policy favoring settlement. Nissan also appeals the superior court's denial of its petition for specific performance and request for attorney's fees. We address each argument in turn.

I. Standard of Review

"All findings of the [B]oard upon all questions of fact properly before the court shall be prima facie lawful and reasonable," and "...

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