Yakubinis v. Yamaha Motor Corp., U.S.A.

• Decision Date: 16 March 2006
• Docket Number: No. 1-05-1772.,No. 1-05-1752.,1-05-1752.,1-05-1772.
• Parties: Joseph A. YAKUBINIS, d/b/a Collinsville Yamaha, Plaintiff-Appellee, v. YAMAHA MOTOR CORPORATION, U.S.A., and Illinois Motor Vehicle Review Board, Terrence M. O'Brien, in his official capacity as Chairperson of the Motor Vehicle Review Board, Defendants-Appellants.
• Court: United States Appellate Court of Illinois

847 N.E.2d 552

Joseph A. YAKUBINIS, d/b/a Collinsville Yamaha, Plaintiff-Appellee, v. YAMAHA MOTOR CORPORATION, U.S.A., and Illinois Motor Vehicle Review Board, Terrence M. O'Brien, in his official capacity as Chairperson of the Motor Vehicle Review Board, Defendants-Appellants.

No. 1-05-1752.

No. 1-05-1772.

Appellate Court of Illinois, First District, Fourth Division.

March 16, 2006.

Rehearing Denied April 13, 2006.

COPYRIGHT MATERIAL OMITTED

Kevin A. Russell, Erin S. Shaw, of Latham & Watkins, Chicago, for Appellant Yamaha Motor Corp., U.S.A.

Lisa Madigan, Attorney General, Gary Feinerman, Solicitor General (John P. Schmidt, Assistant Attorney General), Chicago, for Appellant Illinois Motor Vehicle Review Board.

David M. Duree, of David M. Duree & Associates, P.C., O'Fallon, for Appellee.

Justice GREIMAN delivered the opinion of the court:

Defendants, the State of Illinois Motor Vehicle Review Board (the Board) and Yamaha Motor Corporation (Yamaha), appeal a trial court order reversing the Board's dismissal of a protest filed by plaintiff, Joseph A. Yakubinis, doing business as Collinsville Yamaha (Yakubinis), which alleged that Yamaha did not have good cause to relocate another Yamaha franchisee into Yakubinis's relevant market area, and remanding the protest to the Board for a hearing on its merits. On appeal, defendants contend that the trial court erred in finding that sections 4(e)(8) and 12(c) of the Motor Vehicle Franchise Act (the Act) (815 ILCS 710/4(e)(8), 12(c) (West 2002)), which became effective in 1995 and provide the grounds and procedure for Yakubinis's protest, were applicable to Yakubinis and Yamaha's 1989 franchise agreement.

Yakubinis entered his first franchise agreement with Yamaha in 1986. In 1989, he entered a second franchise agreement with Yamaha that superceded and replaced the 1986 agreement. Pursuant to the agreements, Yakubinis owned and operated a Yamaha franchise in Collinsville, Illinois. The 1989 agreement provided:

"The rights granted herein are nonexclusive. Yamaha reserves the right to appoint additional dealers of any or all of the Products at any time pursuant to Yamaha's marketing program and policies."

Victory Lanes Power Sports (Victory Lanes) entered a franchise agreement with Yamaha in 2000. Pursuant to the agreement, Victory Lanes owned and operated a Yamaha franchise in Dupo, Illinois. In 2003, Yamaha proposed to move Victory Lanes' franchise to Swansea, Illinois, 9.5 miles from Yakubinis's franchise. The parties agree that the new Victory Lanes location is in Yakubinis's relevant market area.

Upon learning of Victory Lanes' proposed move, Yakubinis filed a protest with the Board in which he alleged that the move violated section 4(e)(8) of the Act. Section 4(e)(8) provides that a franchisor violates the Act if it relocates a motor vehicle dealership into the relevant market area of an existing franchise of the same line without good cause and that upon the filing of a protest by the existing franchisee, the Board shall conduct a hearing to determine whether good cause exists to allow the relocation pursuant to the criteria articulated in section 12(c) of the Act (815 ILCS 710/12(c) (West 2002)). 815 ILCS 710/4(e)(8) (West 2002).

The Board initially dismissed Yakubinis's protest for lack of jurisdiction. In a letter to Yakubinis, the Board explained that in Fields Jeep-Eagle, Inc. v. Chrysler Corp., 163 Ill.2d 462, 206 Ill.Dec. 694, 645 N.E.2d 946 (1995), the supreme court found that former sections 4(e)(8) and 12(c) (815 ILCS 710/4(e)(8), 12(c) (West 1992)), which left the good-cause determination to the trial court, violated the doctrine of separation of powers because they delegated for judicial examination matters that were for legislative or administrative determination. New sections 4(e)(8) and 12(c) did not become effective until 1995. See Pub. Act 89-145, eff. July 14, 1995. The Board concluded that, because Yakubinis and Yamaha had entered their agreement prior to 1995, new sections 4(e)(8) and 12(c), relegating the good-cause determination to the Board, did not apply and the Board did not have jurisdiction to hear Yakubinis's protest.

Yakubinis petitioned the Board to reconsider its disposition, arguing that, as a third-party beneficiary of the contract between Yamaha and Victory Lanes, he was entitled to the protection of new sections 4(e)(8) and 12(c); that the 1995 amendment creating new sections 4(e)(8) and 12(c) was procedural and therefore the sections should be applied retroactively to his franchise agreement; that he had been denied due process and equal protection of the law because he had not been afforded the same right to protest a relocation as Victory Lanes; and that a 2003 product addendum to his franchise agreement with Yamaha subjected the entire franchise agreement to the 1995 amendment. After considering the issues raised by Yakubinis, the Board's hearing officer issued an analysis of the Board's jurisdiction, which was consistent with the Board's original letter dismissing the protest, and recommended that the Board dismiss the protest. The Board adopted the hearing officer's decision and dismissed the protest.

Yakubinis filed a complaint for judicial review of the Board's decision in the trial court, raising the same arguments that he had raised before the Board.

Following a hearing on the issues, the trial court entered a written order. The court began by noting that though the Board had based its dismissal of Yakubinis's protest on its lack of jurisdiction, the issue in the case was not jurisdictional. Instead, the trial court framed the issue as "whether applying a certain statutory provision would be a retroactive application of substantive law and, if so, whether such application would be appropriate." The court acknowledged the supreme court's decision in Fields that former sections 4(e)(8) and 12(c) of the Act, under which Yakubinis and Yamaha had entered their franchise agreement, were unconstitutional and that ordinarily the sections would, therefore, be considered void ab initio. However, relying on Perlstein v. Wolk, 349 Ill.App.3d 161, 284 Ill.Dec. 808, 810 N.E.2d 598 (2004), aff'd, 218 Ill.2d 448, 300 Ill.Dec. 480, 844 N.E.2d 923 (2006), and the special concurrence in People v. Gersch, 135 Ill.2d 384, 142 Ill.Dec. 767, 553 N.E.2d 281 (1990) (Miller, J., specially concurring), the court determined that public policy did not favor strict application of the void ab initio doctrine in this case. The court further determined that the amendment creating new sections 4(e)(8) and 12(c) constituted a procedural, rather than a substantive, change to the law and the sections could therefore be applied retroactively. Accordingly, the trial court reversed the Board's dismissal of Yakubinis's protest and remanded the matter to the Board for a hearing on the merits of the protest. Defendants sought leave to appeal the trial court's order. We granted defendants' request and consolidated defendants' appeals.

On appeal defendants contend that the trial court erred in refusing to apply the void ab initio doctrine and in finding that amendments to that Act creating new sections 4(e)(8) and 12(c) were procedural and should be applied retroactively.

Yakubinis first responds that we lack jurisdiction to consider defendants' appeal pursuant to Supreme Court Rule 306(a)(6) (Official Reports Advance Sheet No. 26 (December 24, 2003), R. 306(a)(6), eff. January 1, 2004), as defendants aver in their appellate briefs.

Generally, when a trial court reverses an administrative agency's decision and remands the matter for further proceedings involving the resolution of questions of law or fact, the order is interlocutory and is not appealable. Trunek v. Industrial Comm'n, 345 Ill.App.3d 126, 127, 280 Ill.Dec. 747, 802 N.E.2d 1268 (2003). However, Rule 306(a)(6) provides the process by which an appellant may appeal "an otherwise nonfinal circuit court order that remands a case for a hearing de novo before an administrative agency." Trunek, 345 Ill.App.3d at 128, 280 Ill.Dec. 747, 802 N.E.2d 1268.

Defendants correctly relied on this rule in their jurisdictional statements and also followed the requirements of the rule by seeking leave to appeal by filing a petition before this court. Accordingly, we have jurisdiction to consider defendants' appeal.

We turn now to the substance of defendants' argument. We will begin with a brief overview of sections 4(e)(8) and 12(c) of the Act.

Prior to Fields and the legislature's 1995 amendment to the Act, former section 4(e)(8) prohibited the relocation of a dealer into a franchisee's relevant market area without good cause. 815 ILCS 710/4(e)(8) (West 1992). However, former section 4(e)(8) left the determination of whether good cause existed to the courts. 815 ILCS 710/4(e)(8) (West 1992). Former section 12(c) articulated several criteria the court should consider in determining whether good cause existed. 815 ILCS 710/12(c) (West 1992).

In Fields, the constitutionality of former sections 4(e)(8) and 12(c) of the Act was examined. The supreme court held:

"[T]hrough sections 4(e)(8) and 12(c) of the Act, the General Assembly has impermissibly delegated for judicial examination matters which are for legislative or administrative determination. We hold that this impermissible delegation violates the separation of powers clause of the Illinois Constitution. * * * In the cases before us, we simply conclude that the investigation into and weighing of the statutory and nonstatutory factors in order to decide whether a dealership should be established or relocated, and what the public interest and welfare is in each case involving a proposed dealership, are not functions which courts are equipped to perform nor which the legislature may constitutionally require them to perform." Fields, 163 Ill.2d at 479-80, 206 Ill.Dec. 694, 645 N.E.2d 946.

Accordingly, the court held sections 4(e)(8) and 12(c)...