Ward's Equipment, Inc. v. New Holland North America, Inc.
| Citation | 493 S.E.2d 516,254 Va. 379 |
| Decision Date | 31 October 1997 |
| Docket Number | No. 962544,962544 |
| Court | Supreme Court of Virginia |
| Parties | WARD'S EQUIPMENT, INC., et al. v. NEW HOLLAND NORTH AMERICA, INC. Record |
J. Michael Dady, Minneapolis, MN (Robin M. Spencer; Joseph W. Milam, Jr., Danville; Dady & Gardner, Minneapolis, MN; Woods, Rogers & Hazlegrove, Danville, on briefs), for appellants John Charles Thomas (R. Noel Clinard; Carla T. Hurlbert; Alison R. Wright; Hunton & Williams, on brief), Richmond, for appellee.
Present: CARRICO, C.J., and COMPTON, LACY, HASSELL, KEENAN and KINSER, JJ., and WHITING, Senior Justice.
In this controversy arising from a written contract between a manufacturer and a dealer in farm equipment, the case turns upon whether a party suing for damages may allege facts that essentially reform the contract and thereby withstand demurrer.
In June 1995, appellants Ward's Equipment, Inc., Carl Ward, and Anne Ward (collectively, the dealer) sued appellee New Holland North America, Inc., successor to Ford New Holland, Inc. (the manufacturer or the company). The dealer is a Virginia corporation with its principal place of business in South Boston. The manufacturer is a Delaware corporation with its principal place of business in New Holland, Pennsylvania.
In a "bill of complaint" filed on the chancery side of the court below, the dealer sought compensatory and punitive damages for alleged breaches of contract and alleged tortious activity, and asked for a trial by jury. Attached as the only exhibit to the dealer's pleading is a letter dated October 3, 1994 from the manufacturer to the dealer discussing the parties' obligations under a Dealer Agreement. The dealer did not incorporate the terms of the Dealer Agreement in its "bill of complaint."
Responding, the manufacturer filed a demurrer and a motion craving oyer. Among the grounds of the demurrer, the manufacturer asserted the trial court "lacks equity jurisdiction in that Plaintiffs have a complete and adequate remedy at law." The trial court never was asked to rule on this ground.
In the motion craving oyer, the manufacturer asserted that the dealer's complaint "identifies and characterizes, but fails to include, the written Dealer Agreement" between the parties dated August 14, 1987. The motion further stated: "It is necessary and proper for the Dealer Agreement and Schedule C thereto to be produced, oyer taken of it and that it becomes per se a matter of record for the consideration of this Court on New Holland's demurrer, and for all other purposes as if copied at large in Plaintiffs' Bill of Complaint." Concluding, the manufacturer asked the court to order a complete copy of the Dealer Agreement filed, to be "deemed an exhibit to Plaintiffs' Bill of Complaint." The motion was unopposed and was granted during a July 1996 hearing on the demurrer.
Following oral argument, the trial court sustained the demurrer and denied the dealer's motion for leave to file an amended complaint. We awarded the dealer an appeal from the trial court's September 1996 final order dismissing the action with prejudice.
Settled criteria governing a trial court's consideration of a demurrer should be reviewed. A demurrer admits the truth of all properly pleaded material facts. Fox v. Custis, 236 Va. 69, 71, 372 S.E.2d 373, 374 (1988).
When a demurrant's motion craving oyer has been granted, the court in ruling on the demurrer may properly consider the facts alleged as amplified by any written agreement added to the record on the motion. Hechler Chevrolet, Inc. v. General Motors Corp., 230 Va. 396, 398, 337 S.E.2d 744, 746 (1985). Furthermore, and significant in this appeal, a court considering a demurrer may ignore a party's factual allegations contradicted by the terms of authentic, unambiguous documents that properly are a part of the pleadings. See Fun v. Virginia Military Institute, 245 Va. 249, 253, 427 S.E.2d 181, 183 (1993).
No useful purpose will be served by summarizing in detail the dealer's 105-paragraph, 29-page complaint. It is sufficient to observe that the dealer mounts a broadside attack on the manufacturer as the result of a business decision made by the manufacturer and expressed in the October 3 letter, a so-called "attrition letter."
In that letter, the dealer was notified that the manufacturer's
The dealer alleged that, at the time of this notice, it was negotiating a purchase agreement with a Ward family member, and that the notice severely restricted or eliminated the dealer's ability to consummate the contemplated transaction. The dealer also alleged that shortly after sending the attrition letter, the manufacturer entered into an agreement with one of the dealer's competitors, located 15 miles from the dealer, to begin selling equipment previously available in its trade area only at the dealer's location.
Thus, arising from this climate of keen business competition, the dealer sought damages in a 12-count complaint. Many of the counts have been abandoned; those still viable are labelled "Breach of Contract," "De Facto Termination," "Fraud and Misrepresentation," "Estoppel," "Violation of Michigan Statutes," and "Violation of Virginia Statutes."
On appeal, the dealer contends the trial court erred in sustaining the demurrer "by considering questions of fact not in the record." There is no merit to this contention.
The dealer points to a comment made by the trial judge from the bench during the course of sustaining the demurrer. The court said the complaint failed to allege the manufacturer had engaged in any conduct that was not "authorized" or "anticipated" under the terms of the unambiguous August 1987 contract. This observation did not amount to a consideration of facts not of record. Rather, the ruling demonstrates that the trial court followed the foregoing criteria, which apply when a contract is part of the pleadings. The court merely was describing a situation in which the dealer has ignored the contract's language in asserting claims that the contract refutes.
Next, the dealer argues the trial court erred by ignoring facts it alleged in support of its assertion that the manufacturer breached the contract. The dealer asserted the contract breach occurred when the manufacturer "terminated" the dealership without cause, unreasonably withheld consent to the dealer's sale or assignment of the dealership, failed to deliver equipment to it in a timely manner, encroached upon its "exclusive market area," and sought to replace it with a competitor. The trial court was justified in refusing to accept these factual allegations as true because they are refuted by the terms of the authentic, unambiguous documents that are a part of the pleadings.
The contract in issue consists of a two-page "Dealer Agreement" and a nine-page document labelled "Dealer Agreement Standard Provisions" to which is attached three pages of "schedules." The contract provides, "This agreement shall be governed by and interpreted in accordance with the laws of the State of Michigan."
The law of Michigan is the same as Virginia's on the subject of contract interpretation. A contract must be construed as written and as a whole with all parts being harmonized whenever possible. Associated Truck Lines, Inc. v. Baer, 346 Mich. 106, 77 N.W.2d 384, 386 (1956); Paramount Termite Control Co. v. Rector, 238 Va. 171, 174, 380 S.E.2d 922, 925 (1989).
Relevant to the dealer's breach-of-contract argument, the Agreement makes clear that the dealer's appointment is as a "nonexclusive authorized dealer" and that likewise the dealer's trade area, designated in the contract as "Primary Area of Responsibility," (PAR) is not exclusive to the dealer. Indeed, paragraph 18(a) of the Standard Provisions gives the manufacturer the absolute right to alter the dealer's PAR and to appoint additional dealers within that area.
Additionally, the dealer's claim that it has been "terminated" is contradicted by the plain language of the contract as amplified by the attrition letter. Consistent with the manufacturer's absolute rights set forth in paragraph 18(a), the letter clearly explained that it was "not a termination notice," indicating the manufacturer would continue to do business as normal with the dealer.
Also, the dealer did not have the absolute right to sell or assign the dealership. Even though paragraph 18(d) acknowledges that the dealer "may sell" the...
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