Three Rivers Motors Company v. Ford Motor Company

• Decision Date: 18 April 1974
• Docket Number: Civ. A. No. C.A. 73-174.
• Citation: 374 F. Supp. 620
• Parties: THREE RIVERS MOTORS COMPANY v. The FORD MOTOR COMPANY and Auto-Lite Corporation.
• Court: U.S. District Court — Eastern District of Pennsylvania

374 F. Supp. 620

THREE RIVERS MOTORS COMPANY v. The FORD MOTOR COMPANY and Auto-Lite Corporation.

Civ. A. No. C.A. 73-174.

United States District Court, W. D. Pennsylvania.

April 18, 1974.

Metz, Cook, Hanna & Kelly, Pittsburgh, Pa., for plaintiff.

Eckert, Seamans, Cherin & Mellott, Pittsburgh, Pa., for defendants.

OPINION AND ORDER

SNYDER, District Judge.

This Court has for decision a Motion to Dismiss the Complaint filed by the Defendant Ford Motor Company (Ford) pursuant to Rule 12(b)(6), Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. The Motion sets forth in substance that Three Rivers Motors Company (Three Rivers) when it resigned its Ford Dealership Franchise, executed and delivered to Ford a General Release covering all claims which the Plaintiff had, or could have, against Ford. Therefore, Ford asserts that the release bars this anti-trust action. The Defendants filed an Affidavit of the Assistant Secretary of Ford setting forth that Three Rivers resigned its Ford Motor Agreement (franchise) effective February 9, 1970, and in connection with said resignation delivered to Ford the General Release, a copy of which was attached.¹

At the argument on the Motion, Counsel for Three Rivers there advised the Court that a Petition to Set Aside the Release had just been filed. The Petition asked ". . . this Court to set aside the release given" to Ford by Three Rivers on account of alleged duress employed by Ford. The Defendants were given leave to file an Answer to the Petition, and they filed a Motion to Dismiss stating that the Petition failed to aver a sufficient basis to avoid or set aside the release executed by Three Rivers. In particular, the Defendants' Motion to Dismiss set forth that: "under applicable principles of law, the character of duress which is required to be shown in order to raise a question that a general release was executed under duress must be of such kind and character as to overcome the free volition of the party executing the release." The Motion to Dismiss also requested the Court to enter judgment under Rule 12 on the grounds that the General Release, as executed by the Plaintiff in this case, is a complete bar to all of the claims alleged in its Complaint.

An Evidentiary Hearing was held on October 19, 1973, and after due consideration of all the testimony, the briefs and arguments of counsel, this Court concludes that the Defendant's Motion to Dismiss the Plaintiff's Petition must be denied and the Release must be held inoperative in this particular case.

Mr. William Winterhalter, President of Three Rivers, testified at the Hearing that in 1966 he first contacted Ford with respect to resigning. He was informed at that time that Ford would not buy back his new parts, accessories and equipment inventory. As a result of that fact, he concluded that the amount he would receive would be considerably less than the value of his inventory if he had to proceed to auction, and, therefore, he rescinded his resignation. He said he had requested Ford's assistance in helping him to find a buyer for his facility but was informed by Ford that they would not approve another dealer in that facility, and that it would be necessary for him to acquire a new facility. After he acquired a new facility, a purchaser was found by the name of Marvin Yollin. A Buy-Sell Agreement was duly executed with the sale to be consummated on December 31, 1969. After several extensions, final arrangements were made for sale on February 6, 1970. The Agreement included the purchaser's obligation to buy the parts and equipment inventory. At the time of the closing he was asked to sign the Release on behalf of Three Rivers. The testimony further developed that at least until the Spring of 1967, the Agreement between Three Rivers and Ford (as well as with other Ford Dealers) was that Ford had the option, but not the obligation, to buy back any vehicle, parts, etc., in the event the Dealer resigned. In June of 1967, Ford Sales Agreements were changed to provide that not only when termination was initiated by Ford, but also when a Dealer resigned, Ford had the obligation, and not the mere option, to buy back the vehicles, parts, etc. It appears that pursuant to this policy change, and in November of 1969, Three Rivers was demanding that Ford buy back the parts. Instead, an agreement was apparently worked out with the prospective purchaser, Marvin Yollin, primarily negotiated through Ford, for a total consideration of $524,000.00. It appears that $240,000.00 was put up by Ford and the balance by the purchaser. Of this $524,000.00, some $391,000.00 went to Ford to pay off the four financing plans on the new vehicles, and the balance of $133,804.00 went to Three Rivers.

An exception was added to the original release form as submitted in December, 1969, and prior to closing, at the insistence of Three Rivers which retained Ford's liability after closing for any claims and/or suits filed against Three Rivers with regard to Ford's liability on warranty for products or parts. Finally, at the closing when Mr. Winterhalter (Three River's President) asked his lawyer if he had to sign the Release, he was informed that he had no choice and he would have to sign the Release if any deal was to be consummated.

In addition, the testimony indicated that prior to the closing of the transaction, Three Rivers attempted to negotiate on the prices to be paid for the parts and equipment but Ford set the prices and no deviations were permitted.

Henry W. Fulton testified on behalf of Ford that he was the attorney for Marvin Yollin on the monies furnished by Ford through its Dealer Development Program at the time of the creation of East Hills Ford. Mr. Yollin contributed $60,000.00 and Ford contributed $240,000.00. Mr. Fulton substantiated the Plaintiff's contention that the entire transaction was worked out through Ford's Dealer Development Representative, Beecher Lingerfelt. He insisted that the only question which was raised regarding the Release had to do with some problems with a suit of Eazor Trucking against Three Rivers involving Ford warranties. Three Rivers asked for an exception which was subsequently put into the Release. Mr. Fulton further confirmed the fact that under the terms of the Buy-Sell Agreement with East Hills Ford, a general release had to be obtained in order to open up the new franchise. His only testimony with respect to the form of the Release was that since no question had been raised about it, there had been no discussion with Ford as to whether or not the transaction would have gone through if Three Rivers had refused to sign that particular form of release.

The Plaintiff asked the Court to consider the Affidavit of J. Norman Davis, stating that he was counsel for Three Rivers in 1969 and 1970 when the Ford Franchise was terminated; that the Release given by the Plaintiff in connection with that termination related only to matters having to do with the Franchise Agreement; that he was unaware of any anti-trust violations at that time, and did not contemplate or advise Three Rivers or any of its Officers of the possibility of an action against Ford for such violations; that the Release was "not intended as a release of unknown claims resulting from the violation of the antitrust laws." (Affidavit at ¶ 9).

I. DISCUSSION

Between 1951 and 1965, Three Rivers had operated as a profitable Ford Dealership. Between 1966 and 1970, Three Rivers sustained an annual loss and, under Ford's Dealer Development Program, entered into a Buy-Sell Agreement with East Hills Ford. As part of the entire transaction there was included the execution of a General Release to Ford in the form set forth in Footnote 1. In this action, Three Rivers claims that Ford's sales restrictions, pricing policies, and various financing arrangements it had with other Dealers violated the Anti-Trust laws, and that it was damaged as a result of Ford's unlawful activity. The Release purported to discharge Ford "of and from any and all manner of action and actions, cause or causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, extents, executions, claims and demands whatsoever in law, in admiralty or in equity . . . . upon or by reason of any manner, cause or thing whatsoever from the beginning of the world to the date of these presents . . ."

Under the Affidavits as filed and the testimony received at the Hearing on the Petition to Set Aside the Release, it was clearly established that Ford desired and secured a General Release. There was no indication of any fraud, accident, mistake or misrepresentation.

It is just as clear, however, that the matter of antitrust actions was not, in any way, a part of the negotiations which led to the Release; what concerned the parties was the purchase and sale of assets, any claims in relation thereto, as well as claims inter se concerning the dealership operations.

Three Rivers lost $42,782.00 in 1966, and at that time, through its President, attempted to terminate the Dealership. Ford refused to buy back new parts, accessories, and equipment inventory having an estimated value of $150,000.00. Following this refusal, Three Rivers rescinded its resignation and continued in business. Also in 1966, Ford advised Three Rivers that its facilities were inadequate and directed that new facilities be obtained. Three Rivers accordingly purchased a five acre track of land in the Borough of Wilkinsburg, Pennsylvania, on which Ford (through its Realty Company) built a building and leased it to Three Rivers. Three Rivers moved into the new facility in September of 1968, after having registered a loss of nearly $10,000.00 in 1967. Three Rivers incurred a loss of $23,773.00 in 1968 and in 1969, again facing continued losses,...