Northview Motor Inc v. Chrysler Motors Corp

Opinions of the United
2000 Decisions States Court of Appeals
for the Third Circuit
9-8-2000
Northview Motor Inc v. Chrysler Motors Corp
Precedential or Non-Precedential:
Docket 99-3873
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Filed September 8, 2000
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 99-3873
NORTHVIEW MOTORS, INC.,
Appellant
v.
CHRYSLER MOTORS CORPORATION
JOSEPH P. NIGRO,
Trustee
On Appeal from the United States District Court
for the Western District of Pennsylvania
(D.C. Civ. No. 93-1722)
District Judge: Hon. William L. Standish
Argued August 8, 2000
BEFORE: BARRY, WEIS and GREENBERG, Circuit Jud ges
(Filed: September 8, 2000)
Christopher M. DeVito (argued)
Morganstern, McAdams & Devito
1406 W. Sixth Street, Suite 400
Cleveland, Ohio 44113
Attorneys for Appellant
Mark F. Kennedy
Christopher J. Meyer (argued)
Wheeler, Trigg & Kennedy
1801 California Street, Suite 3600
Denver, Colorado 80202
Attorneys for Appellee
OPINION OF THE COURT
GREENBERG, Circuit Judge.
I. INTRODUCTION
This matter comes on before this court on appeal from a
final order of the district court entered September 28, 1999,
granting judgment as a matter of law in favor of defendant
Chrysler Motors pursuant to Fed. R. Civ. P. 50(a) after the
close of all the evidence on plaintiff Northview Motors's
breach of contract and Automobile Dealers Day in Court
Act ("ADDCA"), 15 U.S.C. SS 1221-25, claims. Northview
also appeals from (1) an order entered March 7, 1995, to
the extent that it granted Chrysler summary judgment on
Northview's Pennsylvania Board of Vehicles Act ("BVA"), Pa.
Stat. Ann. tit. 63, SS 818.1 et seq., claims on the ground
that they were barred by the statute of limitations and (2)
an order entered February 9, 1996, to the extent it granted
Chrysler summary judgment on Northview's claim for
violation of a provision of Pennsylvania's Uniform
Commercial Code ("UCC") which obligates contracting
parties to act in good faith. See 13 Pa. Cons. Stat. Ann.
S 1203. We will affirm the orders entered by the district
court, although we do so with respect to the March 7, 1995
and February 9, 1996 orders for reasons which differ from
those the district court set forth.
A. Factual Background
At the times material to this action, Northview, a
Delaware corporation with its principal place of business in
Pittsburgh, Pennsylvania, was an automobile dealership
franchise selling and servicing Jeep and Eagle vehicles.
2
Frank Cuda, Northview's sole shareholder, oversaw the
dealership's operations. Chrysler, a Delaware corporation
with its principal place of business in Detroit, Michigan, at
the times material to this opinion manufactured Jeep and
Eagle vehicles as successor to American Motors
Corporation.
Cuda had been involved in the automobile industry since
he was a child. See app. at 258. He began in the industry
by working at his father's dealership between 1954 and
1968. See id. at 260. In 1968, Northview began selling new
cars as an American Motors dealer in the North Hills
section of Pittsburgh. See id. at 261. Cuda testified that
throughout the 1970s and 1980s, Northview was a
successful dealership consistently ranking as one of the top
one hundred American Motors dealerships in the nation.
See id. at 287. As an American Motors dealership,
Northview marketed both the Jeep and Eagle lines of
vehicles.
This case arose directly from events commencing on or
about December 11, 1987, when Northview entered into an
American Motors Sales Corporation Eagle Sales and Service
Agreement ("Eagle SSA") and an American Motors Sales
Corporation Jeep Sales and Service Agreement ("Jeep SSA")
(collectively, the "SSAs"). Chrysler subsequently acquired
American Motors Sales Corporation's Jeep and Eagle lines
and became its successor in interest to the Jeep and Eagle
SSAs in contractual privity with Northview.1
Inasmuch as the suit Northview filed against Chrysler
evolved out of the two SSAs to which Chrysler became a
party after it purchased American Motors's Jeep and Eagle
product lines, we set forth significant parallel portions of
the agreements. Section 11(a) of the SSAs obligated
Northview to use its best efforts to sell aggressively and
effectively each and every model of the Jeep and Eagle
product lines. See, e.g., exhs. at 152. Section 12 required
that Northview be a member in good standing of the Dealer
_________________________________________________________________
1. There was testimony that Chrysler acquired American Motors in the
summer of 1987 but even if this is so our result would be the same as
that we reach.
3
Advertising Association, an association which advertised
lines of vehicles sold by its dealer members. See id. at 156.
Section 28 of the SSAs governed their termination. See
exhs. at 161. It provided, in relevant part:
(C) Notwithstanding the provisions above, this
Agreement will terminate automatically without notice
from either party on:
. . . (vi) the failure of DEALER to fully conduct its
Dealership Operations for seven (7) consecutive
business days . . .
Id. at 162 (emphasis added).
Northview asserts that Chrysler had problems with the
allocation of vehicles and parts availability immediately
following the absorption of the Jeep and Eagle dealers into
the Chrysler system. Thus, Northview presented evidence
that it continuously was unable to obtain desired vehicles
from Chrysler to sell to the public and was unable to fill a
fleet order for Alamo Rent-A-Car. See id. at 305.
In addition to the supply problems Northview experienced
under Chrysler, it asserts that it had problems because it
was unable to obtain answers from local Chrysler
management concerning questions critical to the efficient
operation of its dealership. For example, Northview asserts
that Chrysler never explained its system for new vehicle
allocation properly, despite Northview's numerous attempts
to obtain the information. Further, Northview alleges that
Chrysler never gave it a sufficient explanation of its
warranty processing system which is known as Expense Per
Unit Repaired or EPUR. Northview argues that the lack of
an adequate explanation caused its service department to
be audited and placed in a restrictive warranty approval
category.
Clearly there was animosity between Northview personnel
and Cuda on the one hand and local Chrysler management,
or zone employees, on the other. Northview asserts that the
only response Chrysler gave it to its inquiries about
Chrysler's processes was "That's the system." Chrysler
employees, however, documented instances in which Cuda
was uncooperative and verbally abusive towards them.
4
Northview asserts that its supply problems and the
confusion at the dealership concerning Chrysler's operating
procedures, combined with the personal animosity between
Northview and Cuda and Chrysler zone personnel, caused
it increasing financial problems. Northview claims that
because it could not obtain vehicles it could sell, and
instead was left with unwanted or slow moving vehicles, it
was forced to sell vehicles out of trust.2 When Mellon Bank,
Northview's floor plan lender, discovered that Northview
was selling out of trust, it revoked Northview'sfloor plan
agreement and required Northview to enter into an
agreement for repayment of its loan. When Northview was
unable to make the required payments, Mellon Bank closed
the dealership on July 10, 1991.
Upon learning that Northview was closed for business,
Chrysler, on July 19, 1991, sent it notice that it was
canceling the Jeep and Eagle SSAs. After Northview failed
in attempts to sell its dealership, it filed for protection
under Chapter 11 of the Bankruptcy Code, but the
bankruptcy court would not allow for a restructuring of the
failing dealership. Chrysler sent its final notice of
termination to Northview on December 12, 1991.
Although Northview argues that its financial troubles
were attributable directly to the actions of Chrysler and its
employees, plainly other factors contributed to its problems.
Notably, in May 1984, the Attorney General of Pennsylvania
filed suit against Northview alleging that it committed 109
separate violations of Pennsylvania's consumer protection
laws, see app. at 605, an action that led to negative press
coverage of Northview. See id. at 609-10. During the trial
concerning the consumer fraud violations in May 1988, the
Pittsburgh Press quoted Cuda as stating that the lawsuit
had cost Northview a lot of money and that Northview's
_________________________________________________________________
2. A dealer will sell out of trust when it has afloor plan agreement with
a financial institution for it to lend money to the dealer to fund the
purchase of new vehicles. Under the floor plan, as the vehicles are sold,
the dealer is responsible for repayments of the loan. The dealer sells out
of trust when it sells vehicles without making payments to the financial
institution as required by the agreement, but rather keeps the funds
within the dealership for other purposes or otherwise utilizes the funds.
5
sales had "plunged from . . . one hundred ten cars a month
to twenty or thirty cars." Id. at 603.
B. Procedural History
Northview and Cuda, individually, filed the complaint in
this action in the district court on October 20, 1993,
alleging claims predicated on Chrysler's alleged breach of
contract and violation of state and federal statutory law,
including claims under the BVA, the UCC, and the ADDCA.
In particular, count one alleged that Chrysler breached the
Jeep and Eagle SSAs as well as various statutory and
contractual duties of good faith by conduct which
demonstrated its:
(a) failure to act in good faith;
(b) failure to provide financial assistance as promised;
(c) failure to provide products and vehicles;
(d) failure to treat dealership [(Northview)] in equitable
manner; and
(e) discriminatory practices against Plaintiffs.
Northview alleged that as a result of this conduct it was
forced to cease doing business and that the Jeep and Eagle
SSAs were terminated on July 10, 1991.
In count two, Northview and Cuda alleged that Chrysler,
through its acts and omissions, violated the BVA.
Specifically, the count alleged that Chrysler violated the
following provisions of the Act by coercing Northview with
respect to:
(a) S 818.9(a)(1) - ordering or accepting delivery of new
vehicles which were not voluntarily ordered;
(b) S 818.9(a)(3) - participating monetarily in advertising
campaign at expenses of new vehicle dealer; and
(c) S 818.9(a)(4) - threatening to terminate or cancel
franchise unless prejudicial act performed by dealer;
The count also charged Chrysler with:
(d) S 818.9(b)(1) - failure to deliver new vehicles;
6
(e) S 818.9(b)(2) - discriminating among its new vehicle
dealers; and
(f) S 818.9(c) - unfairly and without just provocation
canceling the franchise of the new vehicle dealer. 3
In count three, Northview and Cuda alleged that
Chrysler's intentional and/or negligent acts constituted
tortious interference with business relations. Count four
alleged Chrysler breached its duty of good faith in the UCC.
Count five alleged that Chrysler violated the ADDCA.
In conclusion, Northview and Cuda alleged that "[a]s a
result of the numerous breaches of good faith and wrongful
and intentional acts by [Chrysler], Plaintiffs have suffered
substantial damages including, but not limited to, the loss
of Frank Cuda's life savings and investment, loss of profits
including future profits, loss of franchise auto dealership
and land, loss of salary and benefits." Thus, Northview and
Cuda sought compensatory and punitive damages as well
as attorneys' fees and costs.
On August 16, 1994, Chrysler filed a motion seeking a
summary judgment dismissing all of Cuda's claims. The
district court, in an opinion and order entered on March 7,
1995, granted that motion in an order from which Cuda
does not appeal. As we shall explain, the court also
partially granted Chrysler summary judgment against
Northview at that time, even though Chrysler did not then
move for summary judgment against Northview. Northview
does appeal from that order.
On August 7, 1995, Chrysler filed a motion for summary
judgment against Northview. Following a hearing on the
motion held on December 6, 1995, the district court issued
an order, entered on February 9, 1996, partially granting
and partially denying the motion. On March 11, 1996,
Chrysler filed a motion for reconsideration, which the
district court denied by order entered March 14, 1996.
The court held a pretrial conference on May 6, 1996.
Following the conference, the parties apparently settled the
_________________________________________________________________
3. These provisions were renumbered in 1996 as Pa. Stat. Ann. tit. 63,
SS 818.12 and 818.13.
7
case on May 16, 1996, and thus the district court closed
the case. The settlement, however, was not consummated,
leading Chrysler on February 18, 1998, to file a motion to
enforce the settlement agreement. On June 10, 1998, the
district court entered an order granting the motion to
enforce the settlement.
On July 7, 1998, Northview and Cuda filed an appeal
from the order granting the motion to enforce the
settlement. On June 18, 1999, for reasons implicating
Northview's bankruptcy which we need not explain, we
reversed the order of the district court enforcing the
settlement and remanded the matter to the district court
for further proceedings. See Northview Motors, Inc. v.
Chrysler Motors Corp., 186 F.3d 346 (3d Cir. 1999).
There was a jury trial on the remand starting on
September 14, 1999. At the close of Northview's case,
Chrysler unsuccessfully moved for a judgment as a matter
of law. Thereafter, Chrysler presented its case and the trial
concluded on September 28, 1999. Chrysler then renewed
its motion for a judgment as a matter of law and on
September 28, 1999, the district court granted the motion,
setting forth its reasons on the record. On October 26,
1999, Northview timely filed a notice of appeal from the
September 28, 1999 order. Inasmuch as Northview appeals
from the March 7, 1995, February 6, 1996 and September
28, 1999 orders, we describe them in some detail.
a. The March 7, 1995 Order
In its memorandum opinion and order entered March 7,
1995, the district court addressed Chrysler's motion for
summary judgment with respect to Cuda's claims. The
court determined that Cuda lacked standing to assert
claims pursuant to the ADDCA, and accordingly entered
judgment in Chrysler's favor on those claims. The district
court also concluded that Cuda had failed to establish
essential elements of his breach of contract and UCC
claims in that he did not allege that he was a party to the
agreements involved or that Chrysler owed him a duty of
good faith under the UCC. Finally, with respect to Cuda,
the district court determined that the statute of limitations
8
barred his allegations of tortious interference with contract
and violation of the BVA.
On its own motion, the court granted Chrysler summary
judgment on statute of limitations grounds on Northview's
claims of tortious interference and violations of the BVA, as
the factual bases for these claims were the same as the
bases for Cuda's claims. On this appeal, Northview
challenges the district court's dismissal of its BVA claims
as barred by the statute of limitations but, as we have
indicated, Cuda does not appeal.
b. The February 9, 1996 Order
In its memorandum opinion and order entered on
February 9, 1999, the district court addressed Chrysler's
motion for summary judgment as to Northview's claims for
violations of the ADDCA, breach of contract and breach of
the duty to act in good faith as specified in the UCC, 13 Pa.
Cons. Stat. Ann. SS 1011 et seq. The court partially granted
and partially denied the motion. The court found that
Northview asserted two distinct ADDCA causes of action,
one based upon both Chrysler's failure to act in good faith
in performing and complying with the terms of the SSAs
and the other for Chrysler's lack of good faith in
terminating Northview's franchise.
The court determined that substantial questions of fact
remained to be resolved with respect to Northview's ADDCA
claim relating to the termination of its franchises.
Accordingly, it denied the motion for summary judgment as
to the ADDCA lack of good faith termination claim.
Chrysler, however, also moved for summary judgment as
to Northview's claim that it failed to act in good faith in
performing and complying with the provisions of the
franchise agreements. Specifically, Chrysler asserted that
the bad faith acts of which Northview complained were
insufficient to state a claim or, in the alternative, were
barred by the statute of limitations. The court found that
the following alleged bad faith acts were insufficient, as a
matter of law, to state a claim under the ADDCA:
(1) the alleged failure of Chrysler to provide parts and
vehicles to Northview;
9
(2) the alleged failure of Chrysler to provide financial
assistance to Northview;
(3) the alleged failure of Chrysler to provide Northview
with copies of the District Service Manager's Reports;
(4) the alleged failure of Chrysler to provide adequate
training for Northview personnel concerning Chrysler's
procedures, programs, and computer systems;
(5) the performance of a warranty audit by Chrysler on
the Northview dealership.
App. at 25.
The district court reasoned that Northview had failed to
present sufficient evidence of express or implied coercion,
as required under the ADDCA, to allow it to proceed with
the good faith and performance aspect of its ADDCA cause
of action. In the absence of evidence that it coerced or
intimated Northview, the district court determined that
Chrysler was entitled to judgment as a matter of law on
this claim.
The district court found that only two of Northview's
allegations, other than those relating to termination, could
state a claim for relief under the ADDCA: (1) that Chrysler
threatened to terminate its franchise agreements with
Northview unless Northview agreed to join an advertising
campaign; and (2) that Chrysler forced Northview to accept
new vehicles that it did not want or need. See id. at 26.
This conduct, however, occurred in 1988 and 1987,
respectively, and, as a result, the court found that any
claims based upon these allegations were barred by the
statute of limitations. See id. at 26-28. The court also noted
that Northview had agreed expressly in the SSAs to"at all
times be a member in good standing of the . . . Dealer
Advertising Association." Id. at 28 n.5. The district court
therefore concluded that Northview's complaint with respect
to being forced to join an advertising campaign failed
inasmuch as the use of coercion to enforce a valid
contractual provision is not wrongful under the ADDCA.
See id. (citing Empire Volkswagen, Inc. v. World-Wide
Volkswagen Corp., 814 F.2d 90, 97 (2d Cir. 1987)).
10
When it addressed Northview's claim for breach of the
covenant of good faith and fair dealing in the UCC, the
district court found that Pennsylvania law did not provide
for an independent cause of action for breach of the
covenant of good faith. See app. at 33. The district court
based this determination on the comment to 13 Pa. Cons.
Stat. Ann. S 1203, Pennsylvania's version of the UCC
provision codifying the obligation to act in good faith. See
id. The comment provides:
This section does not support an independent cause of
action for failure to perform or enforce in good faith.
Rather, this section means that a failure to perform or
enforce, in good faith, a specific duty or obligation
under the contract, constitutes a breach of that
contract or makes unavailable, under the particular
circumstances, a remedial right or power. This
distinction makes it clear that the doctrine of good
faith merely directs a court towards interpreting
contracts within the commercial context in which they
are created, performed, and enforced, and does not
create a separate duty of fairness and reasonableness
which can be independently breached.
13 Pa. Cons. Stat. Ann. S 1203, UCC Comment.
Accordingly, the court entered judgment in favor of
Chrysler on Northview's UCC claim.
c. Claims that Proceeded to Trial
Although Northview has focused its briefs on the Rule
50(a) order on the ADDCA claim, at trial it advanced both
its breach of contract claim and its ADDCA claim which, in
light of the district court's earlier rulings, was limited to a
cause of action for "bad faith" termination of Northview's
franchises. Accordingly, the court did not admit evidence of
Northview's being forced to take unwanted cars, the
warranty audits, and the failure of Chrysler to provide
needed vehicles as substantive evidence to support a
damages recovery by Northview for these alleged
wrongdoings. Rather, the court admitted this evidence
under Fed. R. Evid. 404(b) solely for the purpose of
establishing motive or intent, i.e., that Chrysler terminated
11
the SSAs in July 1991 to force Northview out of business in
furtherance of its business plan to terminate stand alone
Jeep and Eagle dealerships and replace them with
dealerships selling other Chrysler lines.
d. The September 28, 1999 Order and Record Statements
As we have indicated, after the close of all of the
evidence, the district court issued an order, dated
September 28, 1999, granting judgment as a matter of law
in favor of Chrysler on all remaining claims pursuant to
Fed. R. Civ. P. 50(a), i.e., those under the ADDCA for
termination of Northview's franchise and for breach of
contract. The court set forth its reasons for granting
judgment in favor of Chrysler on the record. See app. at
1279-80.
After hearing argument from the parties, the district
court explained as follows:
These points that were given to me, there are -- here's
what they say, that they say, what was it, coercive and
discriminatory practices beginning in 1988; failed to
allocate and deliver the appropriate quantity of cars;
forced Northview to accept unwanted vehicles;
performed a retaliatory warranty audit.
Now, clearly the audit was performed. There's no
contract claim or Dealer Day in Court claim for-- that
it's barred by the statute of limitations. Furthermore,
the audit was authorized under the contract.
Improperly placed the dealership on prior approval for
warranty and repair work. Well, that was done in 19--
early in ``88, before the audit occurred. That's also
barred.
And failed to act in good faith in complying with the
contract, with the ulterior purpose of reducing its
dealer body; there is no evidence of that at all.
* * * *
Now, there just -- there isn't any evidence of these
things being a violation of the contract or -- to the
extent that it's claimed a violation of the Dealer Day in
12
Court Act, the only specific matters about which
evidence was offered occurred prior to the bar of the --
prior to the time bar and you can't argue it.
This is what's causing me the trouble in this case I am
having. You know, I'm considering the Rule 50 motion;
I'm left not knowing what it is I can charge this jury.
* * * *
I mean what the theory really is is not that they-- I
don't think it can be really the termination, because
the termination was automatic according to the
contract. It's an automatic termination if it's-- if you
don't do business for seven consecutive days. It's not a
matter of we have the option to do it or not to do it; it
says in the agreement that it's an automatic
termination.
So what the complaint really is is that all these
practices were motivated in order to get Northview out
of business, but the way they did it was to make sure
he went into bankruptcy or he became insolvent and
couldn't operate anymore. That's apparently the theory.
And that because they became insolvent, they then
were -- they were taken -- their assets were taken over
by Mellon Bank, they couldn't possibly have done
business anymore.
* * * *
All of this, like the audit for instance, is barred by the
statute of limitations. You can't claim that as a
violation of the Dealer Day in Court Act. You just can't.
Nor can you claim it is a violation of the contract. In
fact, the contract authorizes the audit.
This is the trouble I'm having with this case, and I'll
tell you -- I honestly -- I don't know how I can
construct a charge. I don't think I understand what the
theories are well enough except -- and I think I'm-- I
don't like to do it, but I think I have to grant the Rule
50 motion. I just don't think there is enough here to
get to a jury with, no matter how you try to put it
together.
13
* * * *
So I'm going to grant the Rule 50 motion. Maybe the
Court of Appeals will tell me what to do.
App. at 1272-76.
The district court then clarified its opinion by stating:
I just don't think there's enough evidence that has
been offered and produced in this case to submit to a
jury on a Dealer Day in Court or breach of contract
claim. That's what I think. And I'm -- when I'm trying
to figure out what to say to tell the jury to instruct
them, I don't know what to instruct them. I don't know
what breach of contract occurred that isn't barred by
the statute of limitations. I don't know what Dealer Day
in Court Act violation that occurred that also isn't
barred by the statute of limitations. There just isn't
any.
Id. at 1277. Northview then appealed.
II. JURISDICTION
This case, although pleaded in conjunction with
numerous state contract and statutory law claims, in part
arose under the ADDCA, 15 U.S.C. SS 1221-25.
Accordingly, the district court had federal question
jurisdiction pursuant to 28 U.S.C. S 1331. Inasmuch as the
parties were not of diverse citizenship, the district court
exercised jurisdiction over the state law claims pursuant to
28 U.S.C. S 1367 (supplemental jurisdiction). As Northview
appeals from a final order of the district court, appellate
jurisdiction is appropriate under 28 U.S.C. S 1291.4
_________________________________________________________________
4. In its notice of appeal, Northview states that it is appealing only
from
the order entered September 28, 1999. Northview's opening brief,
however, additionally raises challenges to the orders entered March 7,
1995 and February 9, 1996. We have jurisdiction to hear the latter
arguments as notices of appeal are construed to include earlier orders
that were "non-final" at the time of issuance if there is a connection
between the order specified in the notice of appeal and the earlier
orders.
See Pacitti v. Macy's, 193 F.3d 766, 776-77 (3d Cir. 1999).
14
III. DISCUSSION
A. Points Raised
On this appeal Northview raises the following points:
I. The district court erred in applying the incorr ect
statute of limitations to Northview's Pennsylvania
Board of Vehicles Act;
II. The district court erred in granting summary
judgment for Chrysler on Northview's independent good
faith claim by disregarding Pennsylvania precedent
regarding the existence of an independent cause of
action based on the breach of an implied duty of good
faith present in all franchise agreements;
III. The district court committed reversible error by
granting Chrysler's motion for directed verdict when
the evidence presented allows a reasonable jury to infer
that Chrysler intended to get rid of their stand alone
Jeep and Eagle dealers and engaged in a course of
conduct to force Northview's termination of its
franchise agreement.
B. Standard of Review
As we noted, to the extent appealed, the March 7, 1995
and February 9, 1996 orders of the district court granted
summary judgment in favor of Chrysler. Our review of the
order of the district court on a motion for summary
judgment is plenary. See Seibert v. Nusbaum, Stein,
Goldstein, Bronstein & Compeau, 167 F.3d 166, 170 (3d
Cir. 1999); Petruzzi's IGA Supermarkets, Inc. v. Darling-
Delaware Co., 998 F.2d 1224, 1230 (3d Cir.1993). We will
affirm only if we conclude that the pleadings, depositions,
answers to interrogatories and admissions on file, together
with the affidavits, show that the party who obtained
summary judgment on a point was entitled to that
judgment as a matter of law and that there was no genuine
dispute of material fact standing in his or her way. See Fed.
R. Civ. P. 56(c).
After trial on Northview's breach of contract and ADDCA
claims, the district court granted Chrysler's Rule 50(a)
motion for judgment as a matter of law. We utilize a
15
plenary standard to review a grant or denial of a judgment
as a matter of law. See Shade v. Great Lakes Dredge &
Dock Co., 154 F.3d 143, 149 (3d Cir. 1998); Salas v. Wang,
846 F.2d 897, 902 (3d Cir. 1988). "[A] directed verdict is
mandated where the facts and the law will reasonably
support only one conclusion." McDermott Int'l, Inc. v.
Wilander, 498 U.S. 337, 356, 111 S. Ct. 807, 818 (1991). A
court should grant such a motion only "if, viewing the
evidence in the light most favorable to the nonmovant and
giving it the advantage of every fair and reasonable
inference, there is insufficient evidence from which a jury
reasonably could find liability." Lightning Lube, Inc. v. Witco
Corp., 4 F.3d 1153, 1166 (3d Cir.1993); see also Shade,
154 F.3d at 149.
C. The Appropriate Statute of Limitations for Board of
Vehicles Act Claims
The Pennsylvania Board of Vehicles Act ("BVA") provided
at the times applicable here for a cause of action on the
following terms:
(a) Action for damages.--Notwithstanding the terms,
provisions or conditions of any agreement or franchise
or other terms or provisions of any novation, waiver or
other written instrument, any person who is or may be
injured by a violation of a provision of this act or any
party to a franchise who is so injured in his business
or property by a violation of a provision of this act
relating to that franchise, or any person so injured
because he refuses to accede to a proposal for an
arrangement which, if consummated, would be in
violation of this act, may bring an action for damages
and equitable relief, including injunctive relief, in any
court of competent jurisdiction.
(b) Punitive Damages.--If any person engages in
continued multiple violations of a provision or
provisions of this act, the court may award punitive
damages in addition to any other damages under this
act.
Pa. Stat. Ann. tit. 63, S 818.20 (renumbered in 1996 as Pa.
Stat. Ann. tit. 63, S 818.29).
16
In relevant part, the BVA prohibited the following
conduct:
(a) Unlawful acts by manufacturers.--It shall be a
violation for any manufacturer, factory branch,
distributor, field representative, officer, agent or any
representative whatsoever of such manufacturer,
factory branch or distributor licensed under this act to
require, attempt to require, coerce or attempt to coerce
any new vehicle dealer in this Commonwealth to:
(1) Order or accept delivery of any new vehicle, part
or accessory thereof, equipment or any other
commodity not required by law which shall not have
been voluntarily ordered by the new vehicle dealer,
except that this paragraph is not intended to modify or
supersede any terms or provisions of the franchise
requiring new vehicle dealers to market a
representative line of those vehicles which the
manufacturer or distributor is publicly advertising.
(2) Order or accept delivery of any new vehicle with
special features, accessories or equipment not included
in the list price of such vehicles as publicly advertised
by the manufacturer or distributor.
(3) Participate monetarily in an advertising campaign
or contest or to purchase unnecessary or unreasonable
quantities of any promotional materials, training
materials, showroom or other display decorations or
materials at the expense of the new vehicle dealer.
(4) Enter into any agreement with the manufacturer
or to do any other act prejudicial to the new vehicle
dealer by threatening to terminate or cancel a franchise
or any contractual agreement existing between the
dealer and the manufacturer, except that this
paragraph is not intended to preclude the
manufacturer or distributor from insisting on
compliance with the reasonable terms or provisions of
the franchise or other contractual agreement and
notice in good faith to any new vehicle dealer of the
new vehicle dealer's violation of such terms or
provisions shall not constitute a violation of the act.
17
Pa. Stat. Ann. tit. 63, S 818.9 (renumbered in 1996 as Pa.
Stat. Ann. tit. 63, S 818.12).
The BVA, however, does not include a statute of
limitations. Further, insofar as we are aware, the
Pennsylvania courts have not issued a published opinion
deciding which statute of limitations is applicable to a claim
brought under the BVA. As a result, we must make a
prediction as to which statute of limitations the
Pennsylvania Supreme Court would apply in a BVA action,
a process that requires us to examine the theories of
liability underlying Northview's claims. See Barnes v. The
American Tobacco Co., 161 F.3d 127, 151 (3d Cir. 1998).
The district court sua sponte applied a one-year statute
of limitations based upon its determination that 42 Pa.
Cons. Stat. Ann. S 5523 governed the time for bringing a
BVA claim. See app. at 14. The court, however, relied upon
a version of section 5523 no longer in effect at the time of
its decision or at the time this cause of action accrued as
the legislature had amended section 5523 in 1982 to read
as follows:
The following actions and proceedings must be
commenced within one year:
(1) An action for libel, slander, or invasion of privacy.
(2) An action upon a bond given as a security by a
party in any matter, except a bond given by a
condemnor in an eminent domain proceeding.
(3) An action upon any payment or performance bond.
42 Pa. Cons. Stat. Ann. S 5523. The parties are in accord
that none of the actions or proceedings listed in section
5523, as amended in 1982, are applicable to a cause of
action brought under the BVA and we are in agreement
with them. Thus, the district court erred when it applied a
one-year statute of limitations to the BVA claims in this
matter and Chrysler acknowledges this point.
Northview argues that the district court should have
applied Pennsylvania's "catch-all" six-year statute of
limitations to its BVA claims in which event the claims
would have been timely. See Appellant Br. at 10 (citing 42
18
Pa. Cons. Stat. Ann. S 5527). Section 5527 provides that
"[a]ny civil action or proceeding which is neither subject to
another limitation specified in this chapter nor excluded
from the application of a period of limitation by section
5531 . . . must be commenced within in six years." Because
we find the BVA claims are the subject of another period of
limitation specified in the relevant statutory chapter, the
six-year statute of limitations is not applicable here.
Chrysler suggested in the district court when moving for
summary judgment against Cuda that a two-year statute of
limitations applies to the BVA claims. It takes the same
position with respect to Northview's BVA claims. In support
of its argument for the application of a two-year statute of
limitations, Chrysler cites to 42 Pa. Cons. Stat. Ann.
S 5524(5) which states that an "action upon a statute for a
civil penalty or forfeiture" must be commenced within two
years. See Appellee Br. at 62. Chrysler also relies on Nelson
v. State Farm Mutual Automobile Ins. Co., 988 F. Supp. 527,
531, 534 & n.11 (E.D. Pa. 1997), see Appellee Br. at 62, as
further support for its contention that a two-year statute of
limitations governs BVA claims. Nelson applied section
5524(7) in finding a two-year statute of limitations
applicable to an action brought under the Pennsylvania
statute for a bad faith claim against an insurer. See Nelson,
988 F. Supp. at 531, 534 & n.11. Thus, Northview is in
effect contending that both subsections (5) and (7) are
applicable.5
But Northview persuasively argues that section 5524(5) is
not applicable to the BVA because the statute is not penal
and instead is remedial. See Appellant Br. at 11-15. While
there are not any reported cases addressing the question of
whether the BVA is remedial or penal in nature, its
language expresses its remedial nature. See Pa. Stat. Ann.
tit. 63, S 818.20 (renumbered in 1996 as Pa. Stat. Ann. tit.
63, S 818.29) (providing for the recovery of damages or
_________________________________________________________________
5. In the district court when moving for summary judgment against
Cuda, Chrysler advanced an argument that section 5524(5) was
applicable and did not rely on section 5524(7). We will not hold,
however, that it waived a subsection (7) argument because it did not
move for summary judgment against Northview on any limitations basis.
19
equitable relief by those injured by the actions of a
manufacturer). Moreover, in 1996 the legislature deleted a
provision in section 818.20 that had provided for punitive
damages in the event of multiple violations on the BVA, and
renumbered the section as 818.29. The legislature thus
emphasized the Act's remedial rather than penal nature.
Further, similar provisions of the ADDCA have been found
to be remedial, see Woodward v. General Motors Corp., 298
F.2d 121, 127-28 (5th Cir. 1962), as have been like state
statutes. See, e.g., American Suzuki Motor Corp. v. Bill
Kummer, Inc., 65 F.3d 1381, 1388-89 (7th Cir. 1995)
(Wisconsin Motor Vehicle Dealer Law is remedial because
enacted to protect dealers from unfair and coercive
manufacturers); Mike Smith Pontiac, GMC, Inc. v. Mercedes-
Benz of North America, Inc., 32 F.3d 528. 531-33 (11th Cir.
1994) (Florida Dealer Protection Act is remedial); Earl Evans
Chevrolet, Inc. v. General Motors Corp., 598 N.E.2d 1187,
1193 (Ohio Ct. App. 1991) (Ohio Dealer Act is remedial).
Consequently, we conclude that the BVA is remedial rather
than penal in nature and, accordingly, section 5524(5) is
not applicable to this action.
We are satisfied, however, that section 5524(7) is
applicable here. Subsection 7 provides that any action or
proceeding "to recover damages for injury to person or
property which is founded on negligent, intentional, or
otherwise tortious conduct" must be commenced within two
years. The BVA provides a cause of action to a franchisee
that is injured in his or her business or property by a
violation of the Act and Northview brought this action
making such claims. See Pa. Stat. Ann. tit. 63, S 8180.20.
The two-year statute of limitations set forth in section
5524(7) has been found to be applicable to other causes of
action seeking a statutory remedy for injuries. As we
mentioned, Nelson relied upon section 5524(7) in applying
a two-year statute of limitations to an action brought under
the Pennsylvania statute for a bad faith claim against an
insurer. See Nelson, 988 F. Supp. at 534. Further, the two-
year statute of limitations period has been held applicable
to the Washington Franchise Investment Protection Act. See
AAMCO Transmissions, Inc. v. Harris, 759 F. Supp. 1141,
1146 (E.D. Pa. 1991) (finding claims for fraud and failure to
20
deal in good faith most analogous to those claims set forth
in section 5524(7)). Also, claims of discrimination under the
Pennsylvania Human Relations Act are subject to a two-
year statute of limitations under section 5524(7). See
Raleigh v. Westinghouse Elec. Corp., 550 A.2d 1013, 1014
(Pa. Super. Ct. 1988); see also Sameric Corp. of Del., Inc. v.
City of Philadelphia, 142 F.2d 582, 599 (3d Cir. 1998)
(applying section 5524 to an action under 42 U.S.C.
S 1983). Here Northview argues Chrysler violated the BVA
because of its coercive tactics used to force Northview out
of business and the discriminatory manner in which it
treated Northview. Thus, it alleged intentional or tortious
conduct and, accordingly, we predict that the Supreme
Court of Pennsylvania would apply the two-year statute of
limitations found in section 5524(7) to the BVA, at least in
the circumstances Northview asserts here.
Counsel for Northview agreed at oral argument that the
BVA cause of action accrued, at the latest, when Chrysler
sent the original notice of termination of the SSAs in July
1991, which was more than two years before it filed this
suit in October 1993. As a result, Northview did not timely
file its BVA claims. Accordingly, the district court's
dismissal of the claims was proper, though for the alternate
reasons we have set forth rather than for those upon which
the district court relied.
D. Northview's Breach of Good Faith Claim
The district court granted summary judgment in favor of
Chrysler on count four of the complaint after finding that
the UCC, as adopted by Pennsylvania, did not create an
independent cause of action for breach of an implied
covenant of good faith, even though the UCC in 13 Pa.
Cons. Stat. Ann. S 1203 provides that "[e]very contract or
duty within this title imposes an obligation of good faith in
its performance or enforcement."6 The UCC, however, is not
_________________________________________________________________
6. At oral argument, counsel for Northview seemed to be arguing that the
claim for breach of the duty of good faith, rather than being an
independent cause of action, colored Northview's breach of contract
claims. This suggestion runs contrary to the complaint and the
arguments presented in the briefs. In count four of the complaint,
21
the sole source of the obligation to perform in good faith
because the Pennsylvania courts have cited Restatement
(Second) of Contracts S 205 for the proposition that every
contract has an implied term that the parties will perform
their duties in good faith, and in its brief Northview did not
confine its claim that Chrysler did not act in good faith to
the UCC. See, e.g., Somers v. Somers, 613 A.2d 1211, 1213
(Pa. Super. Ct. 1992). In practice, however, the courts have
recognized an independent cause of action for breach of a
duty of good faith and fair dealing only in very limited
circumstances. See, e.g., Creeger Brick and Building Supply,
Inc. v. Mid-State Bank and Trust Co., 560 A.2d 151, 153,
154 (Pa. Super. Ct. 1989) (duty is limited to insurers'
dealings with insureds, franchisors' dealings with
franchisees and other narrow situations); see also Parkway
Garage, Inc. v. City of Philadelphia, 5 F.3d 685, 701 (3d Cir.
1993) ("[U]nder Pennsylvania law, every contract does not
imply a duty of good faith.").
Courts have utilized the good faith duty as an interpretive
tool to determine the parties' justifiable expectations in the
context of a breach of contract action, but that duty is not
divorced from the specific clauses of the contract and
cannot be used to override an express contractual term.
See Duquesne Light Co. v. Westinghouse Elec. Corp. , 66
F.3d 604, 617-18 (3d Cir. 1995); USX Corp. v. Prime
Leasing, Inc., 988 F.2d 433, 438 (3d Cir. 1993). Thus, a
party is not entitled to maintain an implied duty of good
faith claim where the allegations of bad faith are"identical
to" a claim for "relief under an established cause of action."
Parkway Garage, Inc. v. City of Philadelphia, 5 F.3d at 701-
_________________________________________________________________
Northview pleaded a separate and independent cause of action under the
UCC. In addition, Northview argued that it "has a cause of action based
upon damages incurred from Chrysler's breach of this implied good faith
duty." See Appellant Br. at 16. We find Northview would not be entitled
to recovery for breach of the duty of good faith unless an independent
cause of action could be pleaded. Accordingly, we review the law of
Pennsylvania to determine if such a cause of action exists and to predict
whether the Supreme Court of Pennsylvania would allow for such a
cause of action. Our disposition rejects the existence of this cause of
action on the facts here both at common law and under the UCC.
22
02 (noting that Parkway's allegations concerning the closing
of a garage in bad faith were identical to its allegations
under 42 U.S.C. S 1983 and, therefore, there was no reason
to imply a separate cause of action for breach of a duty of
good faith); see also D'Ambrosio v. Pennsylvania Nat'l Mut.
Cas. Ins. Co., 431 A.2d 966, 970 (Pa. 1981) (court refused
to recognize separate cause of action for breach of duty of
good faith where adequate remedy was provided under
Unfair Insurance Practices Act.); Creeger Brick v. Mid-State
Bank, 560 A.2d at 154-55; AM/PM Franchise Ass'n v.
Atlantic Richfield Co., 542 A.2d 90, 93-94 (Pa. Super. Ct.
1988), aff 'd in part & rev'd on other grounds 584 A.2d 915
(Pa. 1990); Standard Pipeline Coating Co. v. Solomon &
Teslovich, Inc., 496 A.2d 840, 843 (Pa. Super. Ct. 1985)
(court would not create a tort remedy where there was an
adequate remedy to address the claims in existing torts and
contracts law).
In view of these precedents, we believe that if a plaintiff
alleging a violation of the implied covenant of good faith
also were to file a claim for fraud based on the same set of
facts, Pennsylvania courts likely would decline to proceed
with the claim alleging bad faith. Instead, Pennsylvania
courts would consider the other claims in the plaintiff 's
complaint. Such an approach limits the use of the bad faith
cause of action to those instances where it is essential. The
covenant of good faith necessarily is vague and amorphous.
Without such judicial limitations in its application, every
plaintiff would have an incentive to include bad faith
allegations in every contract action. If construed too
broadly, the doctrine could become an all-embracing
statement of the parties' obligations under contract law,
imposing unintended obligations upon parties and
destroying the mutual benefits created by legally binding
agreements. Therefore, we predict that the Pennsylvania
Supreme Court would not extend the limited duty to
perform a contract in good faith to a situation such as that
presented here in which the parties in great detail set forth
their mutual obligations and rights in the SSAs. We are
further encouraged to reach this result because Congress
in the ADDCA, and the legislature in the BVA, specifically
regulated the relationship between automobile dealers and
manufacturers. Overall, we are satisfied that, in the face of
23
these detailed provisions setting forth both contractually
and statutorily the parties' obligations and rights, we
should not recognize an independent cause of action for
breach of the implied covenant of good faith in this case.7
Accordingly, the district court appropriately granted
summary judgment on this claim.
E. Northview's ADDCA Claim
The ADDCA is a remedial statute enacted to redress the
economic imbalance and unequal bargaining power
between large automobile manufacturers and local
dealerships, protecting dealers from unfair termination and
other retaliatory and coercive practices. See, e.g., Maschio v.
Prestige Motors, 37 F.3d 908, 910 (3d Cir. 1994); Hanley v.
Chrysler Motors Corp., 433 F.2d 708, 710-11 (10th Cir.
1970). It is, essentially, a supplement to the national
antitrust laws, passed to counter-balance the economic
leverage a manufacturer has over its ostensibly
independent dealers, and its "control over [its] product in
what amounts to quasi-integration to the retail level of
distribution." H.R.Rep. No. 2850, 84th Cong., 2d Sess. 1, 3,
reprinted in 1956 U.S.C.C.A.N. 4596, 4596, 4598. There
are four elements of an ADDCA cause of action: (1) the
plaintiff must be an automobile dealer; (2) the defendant
must be an "automobile manufacturer" engaged in
commerce; (3) there must be a manufacturer-dealer
relationship embodied in a written franchise agreement;
and (4) the plaintiff must have been injured by the
defendant's failure to act in good faith. See 15 U.S.C.
S 1222; Maschio, 37 F.3d at 910; Sherman v. British
Leyland Motors, Ltd., 601 F.2d 429, 441 (9th Cir. 1979).8
_________________________________________________________________
7. In this regard, we note that we have stated that a federal court in a
diversity case should be reluctant to expand state common law. See Leo
v. Kerr-McGee Chem. Corp., 37 F.3d 96, 101 (3d Cir. 1994). That
principle also should apply when, as here, a court is exercising
supplemental jurisdiction over state law claims. After all, regardless of
the source of its jurisdiction, the principle is valid because a federal
court is applying state law.
8. Clearly, the first three of the required elements of an ADDCA claim
have been met in this case. The only question at trial was whether
Northview presented facts which would have allowed a reasonable jury to
have concluded that Chrysler failed to act in good faith, as that term is
defined by the ADDCA.
24
It is axiomatic that any inquiry as to the meaning of a
statute must begin with its language. The Act defines the
term "good faith" as "the duty of each party to any
franchise . . . to act in a fair and equitable manner toward
each other so as to guarantee the one party freedom from
coercion, intimidation, or threats of coercion or intimidation
from the other party. . . ." 15 U.S.C. S 1221(e). The Act,
however, does not protect dealers against all unfair
practices, but only against those breaches of good faith
"evidenced by acts of coercion or intimidation." Salco Corp.
v. General Motors Corp., 517 F.2d 567, 573 (10th Cir.
1975). The case law plainly requires actual, or threatened,
coercion or intimidation as an element of an ADDCA claim.
See General GMC, Inc. v. Volvo White Truck Corp., 918 F.2d
306, 308 (1st Cir. 1990); Arnold Pontiac-GMC, Inc. v.
General Motors Corp., 786 F.2d 564, 575 (3d Cir. 1986);
Bob Maxfield, Inc. v. American Motors Corp., 637 F.2d 1033,
1038 (5th Cir. 1981). Consequently, it is well established
that the duty of "good faith" dealing imposed by the Act
must be given a narrow, rather than expansive,
construction. See Autohaus Brugger, Inc. v. Saab Motors,
Inc., 567 F.2d 901, 911 (9th Cir. 1978); Milos v. Ford Motor
Co., 317 F.2d 712, 715-16 (3d Cir. 1963). For example,
when assessing the elements of a claim under section
1221(e), the Court of Appeals for the Ninth Circuit noted
that:
There is no question that the failure to exercise good
faith within the meaning of the Act has a limited and
restricted meaning. It is not to be construed liberally.
. . . It does not mean ``good faith' in a hazy or general
way, nor does it mean unfairness. The existence or
nonexistence of ``good faith' must be determined in the
context of actual or threatened coercion or
intimidation.
Autohaus Brugger, 567 F.2d at 911 (citations omitted).
The case law interpreting the ADDCA provides some
guidelines for determining whether a manufacturer has
been guilty of coercion or intimidation. Thus, a
manufacturer's coercion of a dealer into relinquishing the
right to sell competing car lines may be actionable, at least
if the dealer's franchise agreement gives it the right to make
25
such sales. See, e.g., Cabriolet Porsche Audi, Inc. v.
American Honda Motor Co., 773 F.2d 1193, 1210 (11th Cir.
1985) ("We have little doubt that had Honda threatened to
deny Cabriolet . . . cars to which it was entitled, unless
Cabriolet provided an exclusive facility, this would be
evidence of coercion"); Rea v. Ford Motor Co. , 497 F.2d 577,
582-87 (3d Cir. 1974). Similarly, a manufacturer's efforts to
drive a dealer out of business can qualify as bad faith. See
Junikki Imports, Inc. v. Toyota Motor Co., 335 F. Supp. 593,
595 (N.D. Ill. 1971); see also Randy's Studebaker Sales, Inc.
v. Nissan Motor Corp., 533 F.2d 510, 516 (10th Cir. 1976).
Also, an automobile manufacturer's coercive attempt to
force unwanted automobiles on a dealer constitutes"bad
faith." See David R. McGeorge Car Co. v. Leyland Motor
Sales, Inc., 504 F.2d 52, 55-56 (4th Cir. 1974).
On the other hand, if an ADDCA defendant has
objectively valid reasons for terminating its relations with a
dealer, the dealer cannot prevail in an ADDCA action
absent evidence that the defendant had an ulterior motive
for its action. See Carroll Kenworth Truck Sales, Inc. v.
Kenworth Truck Co., 781 F.2d 1520, 1527 & n.4 (11th Cir.
1986); see also York Chrysler-Plymouth, Inc. v. Chrysler
Credit Corp., 447 F.2d 786, 791-92 (5th Cir. 1971) ("[T]hat
Chrysler Motors may have had grounds for lawful
termination of the automobile dealership does not permit
this court to set aside a jury verdict. . . . The[ADDCA] is
not as concerned with what the parties did as it is
concerned with why they did it.").
Our review of the district court's decision on Chrysler's
Rule 50 motion of necessity is affected by the court's earlier
ruling concerning the statute of limitations and its repeated
decisions to admit certain evidence only as proof of motive
or intent. As noted, the district court concluded that the
statute of limitations barred allegations premised upon
Chrysler forcing Northview to take delivery of cars that it
did not need and forcing it to join an advertising campaign.
The court also prevented Northview from proffering evidence
of Chrysler's failure to provide vehicles and parts, the
performance of the warranty audit and the failure to
provide proper training as direct evidence for a basis for
Northview recovering damages. See id. at 24-26. As a
26
result, the court admitted evidence of such "coercive"
activity only to demonstrate motive or intent -- i.e., that
Chrysler's July 1991 termination of the SSAs was
motivated by its desire to force Northview out of business in
furtherance of Chrysler's business plan to eliminate stand
alone dealers.
The more direct evidence that Northview offered at trial
supporting this theory concerned the fact that the SSAs
were terminated in July 1991 and that certain other stand
alone Jeep and Eagle Dealerships were closed and then re-
opened after having been combined with other Chrysler
dealerships. From this evidence, Northview argues that a
reasonable jury could have concluded that Chrysler coerced
or intimidated it into closing its dealership so that Chrysler
could pair the dealership with another of its vehicle brands.
At argument before us, counsel for Northview confirmed
that he did not challenge the ADDCA statute of limitations
and evidentiary rulings of the district court.9 Rather,
_________________________________________________________________
9. In its opening brief, Northview does not make any mention of the
February 9, 1996 order in its challenges to the district court's decision
on the Rule 50 motion. In fact, Northview makes only an oblique one-
sentence reference to the statute of limitations issue. See Appellant Br.
at 29. Nowhere does Northview expressly challenge the statute of
limitations ruling or the ruling of the district court to admit certain
evidence only as proof of motive or intent. The entire focus of
Northview's
argument is on the fact that, in light of the evidence of motive and the
other evidence at trial, its case on wrongful termination was sufficient
to
allow a jury to find in its favor on the ADDCA claim.
Interestingly, even though Chrysler prevailed, it challenges the
admission of the motive or intent evidence. While Chrysler's argument
along these lines is substantial, see Becker v. ARCO Chemical Co., 201
F.3d 176 (3d Cir. 2000), we will assume without deciding that the
district court properly admitted the evidence as bearing on Chrysler's
motive or intent. Thus, in considering Northview's appeal from the order
granting Chrysler judgment as a matter of law, we are considering the
Rule 404(b) evidence. Accordingly, we are not following our long-standing
practice, see Lightning Lube v. Witco, 4 F.3d at 1198-1200, approved by
the Supreme Court in Weisgram v. Marley Co., 120 S. Ct. 1011, 1019-22
(2000), of considering an appeal from an order granting a judgment as
a matter of law only on the basis of evidence we determine was admitted
properly.
27
Northview argues that when the evidence it presented is
considered as proof of Chrysler's bad motive or intent, a
reasonable jury could have concluded that Chrysler did not
act in good faith when it terminated Northview. 10
While evidence of improper motive may be sufficient in
certain franchise terminations cases to create a jury
question, see Carroll Kenworth Truck Sales, 781 F.2d at
1527 & n.4; York Chrysler-Plymouth, 447 F.2d at 791-92,
the evidence presented here was wholly insufficient to raise
an inference that Chrysler was motivated by a desire to
close Northview as part of a plan to phase out stand alone
Jeep and Eagle dealerships. The theory of Northview's case
appears to rest upon the existence of what has been termed
Plan 2000. Northview was not allowed to reference Plan
2000 by name at the trial because it did not come into
existence until after Northview's SSAs were terminated. See
app. at 68, 164-65. Northview argues, however, that the
plan was in place before its formal adoption and operated
to eliminate stand alone Jeep and Eagle dealerships like
Northview and replace them with dealerships selling both
Jeeps and Eagles and other Chrysler lines such as Dodge
or Plymouth.
In support of its Plan 2000 theory, Northview presented
evidence of a number of stand alone Jeep and Eagle
dealerships that were closed only to have been reopened
later at nearby dealerships of other Chrysler lines. See, e.g.,
app. at 550-54 (listing 6 Jeep and Eagle dealerships, of over
50 in its region, that were closed and combined with
another Chrysler brand). There is noticeably absent from
the evidence Northview presented, however, any evidence
that Chrysler forced these Jeep and Eagle dealerships to
close, that the closed dealerships suffered difficulties
similar to Northview, or that the closing and later reopening
of the dealerships was not a beneficial change for the
_________________________________________________________________
10. Northview has waived any argument that the district court erred in
dismissing its breach of contract cause of action as all of its arguments
in its brief with respect to the judgment as a matter of law are addressed
to the ADDCA. See Society Hill Tower Owners' Ass'n v. Rendell, 210 F.3d
168, 185 (3d Cir. 2000). In any event, the district court correctly
granted
the Rule 50(a) motion on all issues being tried.
28
parties involved. Northview asserts that a reasonable
inference to be drawn from evidence of the mere closing of
certain Jeep and Eagle dealerships is that Chrysler was
motivated to bring about the wrongful termination of all
stand alone Jeep and Eagle dealerships such as Northview.
Based upon the evidence presented, however, this is not a
reasonable inference from the evidence but instead is a leap
of faith. As mentioned, there was no evidence presented to
suggest any connection between the closings or to suggest
that the closings resulted from coercion on the part of
Chrysler.
As argued by Chrysler:
If this marketing plan had been in effect since 1987,
one would expect that Northview would have been able
to supply evidence of one dealer that was terminated or
consolidated pursuant to the plan. If Chrysler had a
four-year old plan to get rid of stand alone Jeep/Eagle
dealers, where was the evidence of a single dealer that
fell prey to the plan? There was none.
Appellee Br. at 36. Chrysler is correct on this point;
Northview did not present evidence of any dealership
"falling prey" to the alleged marketing plan. In the absence
of such evidence, or at least some evidence that the
dealership closings that were proffered were not desired by
the owners and were connected in some manner, Northview
is not entitled to the inference it desires, namely that since
1987 Chrysler was operating under a plan to close all stand
alone Jeep and Eagle dealerships. No reasonable jury could
draw this inference from the facts presented at trial.
As mentioned, the ADDCA does not protect dealers
against all unfair practices, but only against those
"evidenced by acts of coercion or intimidation." Salco Corp.
v. General Motors Corp., 517 F.2d at 573. The case law
plainly requires a plaintiff to present evidence of actual, or
threatened, coercion or intimidation. See Bob Maxfield, Inc.,
637 F.2d at 1038. While we recognize that a manufacturer
could coerce a dealer by placing it in a difficultfinancial
position, Northview has not presented evidence of coercion
or intimidation in this case. Although there may be
evidence that Chrysler and Northview had difficulty
29
understanding and dealing with each other, such difficulty
is not actionable under the ADDCA. See, e.g., Gage v.
General Motors Corp., 796 F.2d 345, 350-51 (10th Cir.
1986) (arbitrary decision making on part of manufacturer
does not constitute violation of ADDCA). A difficult business
relationship is not, in and of itself, coercion or intimidation.
In the absence of evidence from which a reasonable jury
could have inferred that Chrysler coerced or intimidated
Northview, or threatened coercive action against it, the
district court correctly granted Chrysler's Rule 50 Motion.11
In addition, the other evidence of wrongful intent
proffered by Northview was insufficient to create a question
for the jury. For example, Northview presented evidence
that Chrysler did not provide the dealership with sufficient
numbers of the more desirable and faster selling models of
the Jeep Cherokee. The evidence offered, however,
demonstrated that dealers across the country were
experiencing similar problems. See exhs. at 1-2, 3, 4.
Northview did not offer evidence that it suffered shortages
different than those of any other dealer. Thus, in the
absence of evidence of discriminatory treatment, no jury
reasonably could have concluded that Chrysler was
motivated by its desire to close the Northview dealership in
its allocation decisions and thus was coercing Northview by
injuring it financially.
Further, despite arguing that it was forced to order
unwanted vehicles, Northview did not present any evidence
of specific unwanted vehicles that Chrysler forced it to
order. Rather, Northview presented evidence that Chrysler
recommended that Northview order the mix of vehicles that
Chrysler was producing in order to receive its full allocation
of vehicles. See app. at 292. From this evidence, Northview
_________________________________________________________________
11. Chrysler argues that Northview's failure to take care of its
customers,
or otherwise properly run its business, caused its closing. While this
may be so, and indeed we are tempted to acknowledge as much,
particularly in view of Northview's consumer fraud problems, we refrain
from doing so as there is a dispute of fact on this point, and we are
obliged in considering the Rule 50(a) order to view the evidence in a
light
most favorable to Northview. Our point is that regardless of what
Northview did or did not do, Chrysler was entitled to a judgment as a
matter of law with respect to its conduct.
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argues that Chrysler was attempting to coerce the
dealership into ordering unwanted vehicles. The only fair
reading of the evidence, however, is that Chrysler was
suggesting that Northview order the mix of vehicles so that
it could be guaranteed to receive more vehicles. There was
nothing preventing Northview from ordering a greater
number of more desirable vehicles than it was allocated,
but it would have had to wait for other dealers' allocations
to be met first and then have its excess orders satisfied by
any surplus. See app. at 809-10. No reasonable jury could
have concluded that such actions were coercive within the
meaning of the ADDCA. See, e.g., Colonial Dodge, Inc. v.
Chrysler Corp., 11 F. Supp. 2d 737, 744 (D. Md. 1996)
(granting summary judgment in favor of manufacturer upon
finding that under ADDCA dealer is entitled only to cars
due under allocation system, not to all the automobiles it
requests).
Also, the evidence presented at trial merely demonstrated
that Chrysler, on occasion, either urged or recommended
that Northview order, stock, and sell all models of all
vehicle lines. The SSAs, however, obligated Northview to
market and sell all Jeep and Eagle models energetically and
aggressively. See exhs. at 152. In addition, neither the
recommendations of a manufacturer nor the actual
solicitation of vehicle orders rises to the level of a violation
of the ADDCA and they hardly can be viewed as coercive
tactics. See Autohaus Brugger, Inc., 567 F.2d at 913. At
trial, Northview did not present evidence to suggest that
Chrysler did anything more than make suggestions or
recommendations. While it may be true that Chrysler stated
the only way Northview could be guaranteed more vehicles
would be to order in the suggested manner, the evidence
could not support a conclusion that Chrysler used coercion
or intimidation to force Northview to order unwanted
vehicles. Northview was free to order the vehicles it desired,
in the numbers it desired, if it were willing to take the
chance that there would be a sufficient supply after all
dealer allocations were met to meet its demand.
We recognize that Northview presented evidence that
Chrysler failed to explain properly its warranty
reimbursement system and the EPUR. See app. at 313-14,
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332. Again, this problem was one that dealers suffered
universally. See id. at 315. The evidence presented could
not provide a foundation for a conclusion that Chrysler
subjected Northview to discriminatory treatment, i.e., that
Chrysler singled it out for warranty audits or that stand
alone dealerships in particular were subjected to the
audits. Moreover, Northview's evidence did not permit a
finding that: (1) the warranty audit was not warranted; (2)
its placement on a more restrictive warranty approval
system was not appropriate under the circumstances; or (3)
the audit or Northview's placement on the more restrictive
approval system interfered in any way with its ability to
operate the dealership profitably. In the absence of
sufficient evidence to support these conclusions, it would
be unreasonable for a jury to infer that Chrysler used the
warranty audit as a means of coercing Northview to
relinquish its franchise.
Northview suggests that, when viewing the evidence, a
reasonable jury could have concluded that Chrysler, by its
actions and omissions, made it impossible for Northview to
operate profitably. Acceptance of this argument, however,
would require viewing evidence concerning vehicle ordering
and supply, warranty audits, and animosity as substantive
evidence to support a damages recovery. As mentioned,
Northview was prevented from proffering such evidence for
that purpose and has not raised any argument here to
suggest that the court's limitation was erroneous.
Accordingly, Northview is not entitled to the inference it
desires. Moreover, the evidence could not support an
inference of coercion or intimidation as is required by the
ADDCA.
As a final matter, we note that the SSAs were terminated
by operation of section 28, which states that the failure of
a dealership to operate its business for seven consecutive
business days automatically terminates the SSAs without
notice. See exhs. at 162. Thus, notwithstanding Chrysler's
having mailed Northview a notice of termination in July
1991, in light of our analysis of the evidence we are
satisfied that a reasonable jury could not have concluded
that the termination of the SSAs pursuant to section 28
supports a cause of action under the ADDCA. See, e.g.,
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Dick Winning Chrysler-Plymouth, Inc. v. Chrysler Motors
Corp., 750 F.2d 895, 899-900 (11th Cir. 1985) (no violation
of ADDCA where franchise termination was in accordance
with express terms of agreement); Globe Motors, Inc. v.
Studebaker-Packard Corp., 328 F.2d 645, 648-49 (3d Cir.
1964). Overall, we are satisfied that the district court
properly granted Chrysler's motion for judgment as a
matter of law, even when we exercise the generous
standard of review owed to Northview on its appeal from the
judgment entered pursuant to Rule 50(a).
IV. CONCLUSION
For the reasons set forth above, we affirm the March 7,
1995 and February 9, 1996 orders of the district court
granting summary judgment in favor of Chrysler as to
Northview's BVA and UCC good faith claims. We also affirm
the September 28, 1999 order granting Chrysler's motion
for judgment as a matter of law pursuant to Rule 50(a).
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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