Sutherlin Toyota, Inc. v. Toyota Motor Sales USA, Inc.

Decision Date04 August 1989
PartiesSUTHERLIN TOYOTA, INC. v. TOYOTA MOTOR SALES USA, INC., et al. 88-315.
CourtAlabama Supreme Court

J. Gullatte Hunter III, of Simmons, Ford and Brunson, Gadsden, for appellant.

S. Lynne Stephens of Leitman, Siegal, Payne & Campbell, Birmingham, for appellees Toyota Motor Sales U.S.A. and Toyota Motor Distributors, Inc.

Jack B. Porterfield, Jr., and William Dudley Motlow, Jr., of Porterfield, Scholl, Bainbridge, Mims & Harper, Birmingham, for appellee Fort Pierce Toyota, Inc., d/b/a Southeast Economy Motor Homes.

ADAMS, Justice.

This is an appeal from a summary judgment for the defendant in a declaratory judgment action wherein Sutherlin Toyota, Inc. ("Sutherlin"), demanded indemnification from Toyota Motor Sales USA, Inc., et al. (all hereinafter referred to as "TMS"), for damages and attorney fees accruing from counterclaims filed against it in Sutherlin Toyota, Inc. v. James M. Ford, et al., Etowah Circuit Court 1 No. CV-85-434-WHR. The following facts are pertinent to a determination of this case.

In April 1985, James and Betty Ford visited Sutherlin Toyota, Inc., and discussed with its agents the possibility of purchasing a 1984 Toyota Ranger. After Sutherlin agreed to install certain accessories that James Ford wanted on the Ranger, the Fords signed the necessary documents and purchased the vehicle. The day after the purchase, James read the documents he and Betty had signed the previous day. Apparently unsatisfied with the substance of the documents, he stopped payment on his check and attempted to rescind the contract. 2 Sutherlin was never given the opportunity to install the accessories that had been requested by James Ford.

Ultimately, Sutherlin sued the Fords to recover the price of the Ranger. The Fords, in turn, counterclaimed, alleging that Sutherlin had misrepresented material facts relevant to the sale and seeking rescission of the contract and damages for the alleged conversion by Sutherlin of their trade-in vehicle. As a result of this counterclaim, Sutherlin sought indemnification from TMS pursuant to the Alabama Motor Vehicle Franchise Act, §§ 8-20-1 through -12, Ala.Code 1975, for all damages and attorney fees arising from the counterclaim. The trial court thereafter entered summary judgment in favor of TMS, and this appeal resulted.

We must interpret the Alabama Motor Vehicle Franchise Act and determine whether that Act provides for indemnification of a dealer by a manufacturer when the alleged misconduct is on the part of the dealership as opposed to the manufacturer. Sutherlin argues that it is entitled to indemnification pursuant to § 8-20-4(3)(o), which states as follows:

"Notwithstanding the terms, provisions or conditions of any dealer agreement or franchise or the terms or provisions of any waiver, prior to the termination, cancellation or nonrenewal of any dealer agreement or franchise, the following acts or conduct shall constitute unfair and deceptive trade practices:

"....

"(3) For any manufacturer, factory branch, factory representative, distributor or wholesaler, distributor branch or distributor representative:

"....

"o. To fail to indemnify and hold harmless its motor vehicle dealers against any losses, including, but not limited to, court costs and reasonable attorneys' fees, or damages arising out of complaints, claims or lawsuits, including, but not limited to, strict liability,...

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2 cases
  • Edwards v. Kia Motors of America, Inc.
    • United States
    • Alabama Supreme Court
    • May 16, 2008
    ...end, to regulate manufacturers and dealers and the dealings between manufacturers and their dealers." Sutherlin Toyota, Inc. v. Toyota Motor Sales USA, Inc., 549 So.2d 460, 461 (1989). We have stated that the purpose of the Franchise Act is "to give balance to the inequality of bargaining p......
  • Smith's Sports Cycles, Inc. v. American Suzuki Motor Corp.
    • United States
    • Alabama Supreme Court
    • October 14, 2011
    ...end, to regulate manufacturers and dealers and the dealings between manufacturers and their dealers.” Sutherlin Toyota, Inc. v. Toyota Motor Sales USA, Inc., 549 So.2d 460, 461 (1989). Section 8–20–5 of the Franchise Act governs cancellations, modifications, and terminations of franchise re......

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