Mente Chevrolet Oldsmobile, Inc. v. GMAC , 451 F. App'x 214 ( 2011 )


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  •                                        NOT PRECEDENTIAL
    UNITED STATES COURT OF APPEALS
    FOR THE THIRD CIRCUIT
    _____________
    No. 10-3309
    _____________
    MENTE CHEVROLET OLDSMOBILE, INC.,
    f/k/a Mente Chevrolet, Inc. trading as Mente Chevrolet;
    MENTE CHRYSLER DODGE, INC.; DONALD M. MENTE
    v.
    GMAC
    GMAC INC., now known as ALLY FINANCIAL INC.,
    Appellant
    ______________
    On Appeal from the United States District Court
    for the Eastern District of Pennsylvania
    District Court No. 5-08-cv-02403
    District Judge: The Honorable Juan R. Sanchez
    ______________
    Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
    November 10, 2011
    Before: SCIRICA, SMITH, and JORDAN, Circuit Judges
    (Filed: November 15, 2011)
    _____________________
    OPINION
    _____________________
    SMITH, Circuit Judge.
    GMAC, Inc. appeals from an order entered by the United States District
    Court for the Eastern District of Pennsylvania denying GMAC’s renewed motion
    for judgment as a matter of law, after a jury found for Plaintiffs Mente Chevrolet
    Oldsmobile, Inc., Mente Chrysler Dodge, Inc., and Donald M. Mente (collectively,
    “Mente”) on their breach of contract claim and awarded Mente $4 million in
    compensatory damages. For the reasons that follow, we will affirm.1
    GMAC and Mente entered into a contract (the “Financing Agreement”)
    financing two of Mente’s car dealerships.     Under the terms of the Financing
    Agreement, Mente was responsible for making payments to GMAC “faithfully and
    promptly” upon the sale of a car. The Financing Agreement did not define the
    phrase “faithfully and promptly.”
    On July 19, 2007, GMAC conducted a surprise audit on Mente’s
    dealerships. GMAC asserted that Mente had not made payments on 14 recently
    sold vehicles, and declared that Mente was “out of trust.” Mente informed GMAC
    that the delay was attributable to the fact that Dawn Johnson, the dealerships’
    controller, was on vacation. Johnson, who had previously told GMAC that she
    would be on vacation, was the only person who could issue checks on behalf of the
    2
    dealerships.   Mente requested that GMAC allow Johnson to return from her
    vacation to make the required payments, as it regularly had in the past when
    Johnson was on vacation. GMAC refused, and demanded immediate payment.
    Because Johnson was not available to make the required payment, GMAC
    terminated Mente’s credit lines, notified General Motors and Chrysler that the
    credit lines were terminated (preventing Mente from purchasing new vehicles),
    seized possession of Mente’s assets, and placed armed guards at the dealerships.
    Mente feared that any unpaid debts might lead to arrest and jail time, and asked
    GMAC to release the funds needed to pay off their debts. GMAC agreed on the
    condition that Mente sign an agreement (the “Forbearance Agreement”) admitting
    to defaulting under the Financing Agreement and releasing Mente’s right to sue
    GMAC for previous wrongdoings. Mente signed the Forbearance Agreement.
    Mente subsequently brought suit in the United States District Court for the
    Eastern District of Pennsylvania, claiming, inter alia, that GMAC breached the
    Financing Agreement by declaring Mente out of trust for failing to make payments
    “faithfully and promptly.” The case proceeded to a jury trial.
    At trial, GMAC argued that: (1) by signing the Forbearance Agreement,
    Mente waived their right to claim a breach of the Financing Agreement; and (2)
    1
    The District Court had jurisdiction over this case, which included claims under
    federal law, under 
    28 U.S.C. §§ 1331
    , 1367. We have final order jurisdiction
    3
    under the Financing Agreement, GMAC had the right to demand payment
    immediately upon sale of a car. Mente argued, among other things, that: (1) the
    Forbearance Agreement was not enforceable due to GMAC’s unclean hands; and
    (2) the parties’ course of dealings showed that Mente was not obligated to make its
    payments immediately upon sale of a car.         Mente also provided evidence of
    damages allegedly caused by GMAC’s breach, showing that Mente: (1) suffered
    $707,000 in lost profits from sales; (2) lost $1.15 million in the “blue sky” value of
    Mente Chevrolet, Oldsmobile, Inc.; and (3) lost $3.259 million in dealer
    termination assistance.
    The jury found that GMAC had breached the Financing Agreement. The
    jury also found that the Forbearance Agreement was unenforceable as the result of
    GMAC’s unclean hands. The jury awarded Mente $4 million in compensatory
    damages for GMAC’s breach.
    After the jury delivered its verdict, GMAC renewed its motion for judgment
    as a matter of law on the breach of contract claim. GMAC argued, in relevant part,
    that: (1) the Financing Agreement was unambiguous and GMAC was entitled to
    declare Mente out of trust; (2) the Forbearance Agreement was valid and barred
    Mente’s breach of contract claim, despite the jury’s finding of a breach; and (3) the
    jury’s damages award was too speculative. The District Court denied GMAC’s
    under 
    28 U.S.C. § 1291
    .                   4
    motion, and GMAC now appeals. We exercise plenary review, and apply the same
    standard as the District Court. Curley v. Klem, 
    499 F.3d 199
    , 205-06 (3d Cir.
    2007). We view “the evidence in the light most favorable to . . . the verdict
    winner, and drawing all reasonable inferences in his favor.” See Pitts v. Delaware,
    
    646 F.3d 151
    , 155 (3d Cir. 2011).
    The District Court was correct that the Financing Agreement was ambiguous
    because the contract did not define “faithfully and promptly” and the phrase is
    capable of being reasonably understood in more than one way. See Trizechahn
    Gateway LLC v. Titus, 
    976 A.2d 474
    , 483 (Pa. 2009).2 As a result, the issue
    whether the Financing Agreement had been breached was properly submitted to
    the jury.3   
    Id.
       Mente’s evidence supported the jury’s interpretation of the
    Financing Agreement, and thus supported the jury’s finding of a breach.
    Second, the District Court correctly concluded that the Forbearance
    Agreement was not enforceable because the jury found that GMAC had unclean
    hands. GMAC argues on appeal that the unclean hands doctrine does not apply
    here because Mente’s claim is contractual and not equitable. Here, however, the
    2
    The parties agree that Mente’s breach of contract claim is governed by
    Pennsylvania law.
    3
    GMAC argues that it was entitled to demand immediate payment as a virtue of
    another clause in the Financing Agreement. The interaction between that clause
    and the “faithfully and promptly” clause, however, is a question of fact that was
    5
    doctrine is being invoked to defend against GMAC’s request to enforce the waiver
    of Mente’s breach of contract claim in the Forbearance Agreement.             Under
    Pennsylvania law, a request to enforce a contractual waiver is a request for specific
    performance of the contract containing the waiver. See Griest v. Penn. State Univ.
    & Dickinson School of Law, 
    897 A.2d 1186
    , 1186 (Pa. Super. Ct. 2006)
    (considering a request for specific performance of a release of a claim under the
    Pennsylvania Human Relations Act); Gateway Center Corp. v. Merriam, 
    434 A.2d 823
    , 825 (Pa. Super. Ct. 1981) (considering a request for specific performance of a
    release of various legal claims). Specific performance is an equitable remedy, see
    Gateway, 
    434 A.2d at 825
    , and so can be barred by the doctrine of unclean hands.
    In re E.F., 
    995 A.2d 326
    , 332 (Pa. 2010) (holding that a party “has no right to
    invoke equity [where] he comes before the court with unclean hands”).4 The jury
    also found that at least one breach of contract claim accrued after the Forbearance
    Agreement was signed, and thus the agreement did not waive all of Mente’s
    claims.
    properly submitted to the jury. Marshall v. Port Auth., 
    568 A.2d 931
    , 943 (Pa.
    1990).
    4
    GMAC also argues that the doctrine of unclean hands can only be invoked by a
    party seeking to defeat a claim for affirmative equitable relief. Pennsylvania
    courts, however, have held that any “party seeking equitable relief . . . must come
    before the court with clean hands.” Mudd v. Nosker Lumber, Inc., 
    662 A.2d 660
    ,
    663 (Pa. Super. Ct. 1995), cited approvingly in Jacobs v. Halloran, 
    710 A.2d 1098
    ,
    1103 (Pa. 1998).
    6
    Finally, the District Court correctly found that the $4 million consequential
    damage award was not too speculative. The jury was provided expert testimony
    estimating various forms of damage. With this evidence, the jury’s verdict was not
    impermissibly speculative under Pennsylvania law. See Kituski v. Corbman, 
    714 A.2d 1027
    , 1030 (Pa. 1998).5
    We will affirm the District Court’s order.
    5
    GMAC also argues that Donald Mente lacks standing to seek damages for the lost
    property value suffered by the dealerships, which were owned by partnership
    entities and not by Donald Mente himself. As the District Court noted, however,
    the evidence relating to losses in property value was provided to help estimate
    Mente’s lost dealer termination assistance, which would have been based in part on
    the rental value of the dealership. Moreover, there is no reason to conclude that the
    jury awarded Donald Mente damages based on any loss in property value when its
    $4 million award was well within the amount calculated by the experts without
    including lost property value.
    7
    

Document Info

Docket Number: 10-3309

Citation Numbers: 451 F. App'x 214

Judges: Jordan, Scirica, Smith

Filed Date: 11/15/2011

Precedential Status: Non-Precedential

Modified Date: 11/5/2024