Crossroads Ford Truck Sales v. Sterling Truck Corporation

Filed 11/23/10 NO. 4-10-0204
IN THE APPELLATE COURT
OF ILLINOIS
FOURTH DISTRICT
CROSSROADS FORD TRUCK SALES, INC., ) Appeal from
Plaintiff-Appellant, ) Circuit Court of
v. ) Sangamon County
STERLING TRUCK CORPORATION; DAIMLER ) No. 09L60
TRUCKS NORTH AMERICA, LLC, d/b/a )
FREIGHTLINER TRUCKS and WESTERN STAR; ) Honorable
and CHRIS PATTERSON, ) Patrick W. Kelley,
Defendants-Appellees. ) Judge Presiding.
________________________________________________________________
JUSTICE TURNER delivered the opinion of the court:
In October 2009, plaintiff, Crossroads Ford Truck
Sales, Inc. (Crossroads), filed a second-amended complaint
against defendants, Sterling Truck Corporation (Sterling),
Daimler Trucks North America, LLC (Daimler Trucks), and Chris
Patterson. In December 2009, defendants filed a motion to
dismiss. In February 2010, the circuit court granted the motion
to dismiss in part.
On appeal, Crossroads argues the circuit court erred in
dismissing portions of its second-amended complaint. We affirm.
I. BACKGROUND
Daimler Trucks is a Delaware limited-liability company
and a wholly owned subsidiary of Daimler AG. Daimler Trucks is
the largest heavy-duty truck manufacturer in North America and
manufactures various brands of trucks including Freightliner,
Western Star, and Sterling. Sterling is a Delaware corporation
licensed to do business in Illinois and a wholly owned subsidiary
of Daimler Trucks. Chris Patterson is the chief executive
officer of Daimler Trucks and president of Sterling. Detroit
Diesel Corporation (Detroit Diesel) is a subsidiary of Daimler AG
and engaged in the business of manufacturing engines and parts
installed in Sterling, Freightliner, and Western Star trucks.
Crossroads is a motor vehicle dealer and has been a
Sterling dealer since 1998. Sterling and Crossroads entered into
a sales and service agreement on August 20, 2005. Under the
agreement, Crossroads was granted the right to purchase Sterling
trucks and vehicle parts. Sterling "reserve[d] the right to
discontinue at any time the manufacture or sale of any or all
Sterling Trucks Products or to change the design or specification
for Sterling Trucks Products without prior notice to [Cross-
roads]." The agreement was to continue in effect until December
31, 2009.
In February 2009, Crossroads filed a complaint against
defendants, alleging, inter alia, violations of the Motor Vehicle
Franchise Act (Franchise Act) (815 ILCS 710/1 through 32 (West
2008)), fraud, and tortious interference with contract. In April
2009, defendants filed a motion to dismiss pursuant to section 2-
615 of the Code of Civil Procedure (Procedure Code) (735 ILCS
5/2-615 (West 2008)). In June 2009, the circuit court ordered
the complaint stricken and granted Crossroads 30 days to file an
amended complaint.
In July 2009, Crossroads filed a first-amended com-
plaint setting forth the same or similar issues. In August 2009,
defendants filed a section 2-615 motion to dismiss. In September
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2009, the circuit court granted the motion in part and allowed
Crossroads to file a second-amended complaint.
In October 2009, Crossroads filed a 14-count second-
amended complaint against defendants. In count I, Crossroads
alleged Sterling violated various sections of the Franchise Act.
Crossroads alleged Patterson notified it in an October 14, 2008,
letter that Daimler Trucks was announcing a "two brand strategy"
with the discontinuation of production of Sterling trucks. The
letter to Sterling dealers stated, in part, as follows:
"The Sterling Trucks Brand and product
line will be discontinued due to overlap with
offerings in the other [Daimler Trucks] prod-
uct lines and low market penetration. Deal-
ers may continue to accept orders for new
Sterling Trucks until January 15, 2009[,]
with requested delivery no later than Fri-
day[,] March 31, 2009. The last day of pro-
duction will be March 26, 2009.
The Sterling dealer network will con-
tinue to perform warranty repairs and mainte-
nance, and continue to supply parts and tech-
nical support to Sterling customers."
To continue as a Sterling service-only dealership, the letter set
forth a transition program that provided, in part, as follows:
"[Daimler Trucks] will offer you the
opportunity to continue on as a Sterling
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service dealership under a new Sterling Ser-
vice Dealer Agreement. This new Service
Dealer Agreement will replace the existing
Sterling Dealer Sales and Service Agreement.
As part of the transition process you will
receive a formal notice of termination of
your Sales and Service Agreement in the com-
ing weeks.
As an added incentive to stay with
Daimler Trucks as a service dealer, and in
recognition of your past commitment, Sterling
is offering substantial transition payments
to those current Sterling dealers who sign on
to become authorized Sterling Service Deal-
ers."
If Crossroads accepted the offer to participate in the transition
bonus program, it was required to sign a release of liability.
Daimler Trucks offered Crossroads $203,000 as a transition bonus.
If Crossroads chose not to participate in the transi-
tion bonus program and thereby not continue as a service dealer,
it would be offered repurchase assistance. The letter also
provided as follows:
"Following termination of the Sales and
Service Agreement, if you do not otherwise
sell new OEM product with Detroit Diesel
engines, you will not be entitled to a re-
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newal of your Detroit Diesel Direct Dealer
Agreement, which is currently set to expire
on December 31, 2008."
Also on October 24, 2008, Daimler Trucks filed an
announcement with the Securities and Exchange Commission noting
the discontinuation of the Sterling trucks product line.
"The Sterling Trucks brand will be dis-
continued effective in March 2009. Additions
to the Freightliner and Western Star product
ranges will be made to address market seg-
ments that have been served exclusively by
Sterling offers in the [Daimler Trucks] sta-
ble."
On November 24, 2008, Daimler Trucks sent the following
letter to Crossroads:
"As stated in the October 14, 2008[,]
communications, this letter is your formal
notice that [Sterling] is exercising its
rights pursuant to [s]ection IX.B of your
Sterling Trucks Dealer Sales and Service
Agreement (the 'Dealer Agreement') to discon-
tinue the manufacture of Sterling Truck vehi-
cles.
As we have previously communicated,
[Sterling] will continue to manufacture new
Sterling vehicles until March 2009 and we
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expect the last day to place an order for a
new Sterling Truck to be built will be Janu-
ary 15, 2009. However, Sterling trucks will
continue to be marketed and sold for so long
as new Sterling vehicles are available.
You have been provided an opportunity to
transition from your Dealer Agreement to a
new Service Agreement. In the event you do
not accept this opportunity, your current
Sales and Service Agreement remains in ef-
fect.
This notice does not constitute a notice
of termination or modification of your Dealer
Agreement, because you may elect to continue
operating under your current Dealer Agree-
ment.
While we believe no formal notice is
required under your state's dealer laws, if
you feel otherwise, please consider this that
notice. Likewise no notice is required to be
sent to your state's licensing department,
but they have also been copied on this letter
to ensure total communication."
Crossroads alleged the October and November 2008
letters amounted to a constructive notice of impending termina-
tion or nonrenewal of its franchise "at an unspecified date in
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the future when Crossroads would be unable to acquire new Ster-
ling trucks." Crossroads alleged this violated the Franchise
Act, including section 4(b) (815 ILCS 710/4(b) (West 2008)),
because Sterling's conduct was in bad faith and caused damages;
section 4(d)(6) (815 ILCS 710/4(d)(6) (West 2008)), because
Sterling caused the termination or nonrenewal of the franchise
without good cause; section 4(d)(1) (815 ILCS 710/4(d)(1) (West
2008)), because Sterling arbitrarily or capriciously modified the
plan of allocation of new Sterling trucks to Crossroads causing
it damages; section 4(d)(6)(A) (815 ILCS 710/4(d)(6)(A) (West
2008)), because Sterling without good cause failed to provide
Crossroads with statutory notice of termination or nonrenewal;
and section 9 (815 ILCS 710/9 (West 2008)), because Sterling has
terminated or failed to renew the franchise without paying fair
and reasonable compensation to Crossroads for the value of the
business and franchise.
Count II alleged Daimler Trucks violated various
sections of the Franchise Act, including sections 4(b), 4(d)(6),
4(d)(1), 4(d)(6)(A), and 9. Count III alleged Patterson violated
section 4(d)(6) of the Franchise Act for terminating the fran-
chise without good cause.
Count IV alleged Daimler Trucks violated section 4(b)
of the Franchise Act by intentionally requiring Crossroads to
invest in Sterling products at a time when Daimler Trucks per-
sonnel knew it planned to discontinue the manufacture of new
Sterling-type trucks under the Sterling brand.
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Count V alleged Daimler Trucks tortiously interfered
with Crossroads' business relationship with Sterling. Crossroads
alleged its franchise and section 4(d)(6) of the Franchise Act
created a reasonable expectation of a continuing valid business
relationship between it and Sterling that would not be terminated
absent good cause. Count V alleged the October 2008 letter
interfered with and caused the termination and/or nonrenewal of
the franchise with Sterling without good cause resulting in
damages to Crossroads through the loss of the franchise and loss
of business and reputation.
Count VI alleged Daimler Trucks violated sections
4(d)(6), 4(b), and 4(d)(4) of the Franchise Act as a result of
the nonrenewal of Crossroads' Detroit Diesel direct dealer agree-
ment. Crossroads alleged the dealer agreement allowed it to
purchase parts needed in the warranty work and nonwarranty repair
and maintenance of Sterling trucks. On April 1, 2009, Daimler
Trucks sent the following letter to Crossroads:
"Your Detroit Diesel Corporation ('DDC')
Direct Dealer Agreement, originally dated
effective January 1, 2005[,] and subsequently
extended expired on December 31, 2008. Since
that time, DDC has filled orders for DDC
products, and has honored DDC warranty claims
for all Sterling dealers, including those who
did not accept the Sterling Transition Bonus
program.
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This letter will give notice that as of
April 10, 2009, DDC will not accept any fur-
ther orders, will cancel all pending orders,
and will not accept any claims for warranty
reimbursement for work performed after that
date."
Crossroads alleged Daimler Trucks unlawfully caused the dealer
agreement between Detroit Diesel and Crossroads not to be renewed
as a result of Crossroads' refusal to sign the transition bonus
program and general release.
Count VII alleged Sterling's discontinuation of the
availability of new Sterling vehicles to Crossroads under the
sales and service agreement constituted a termination of its
franchise without good cause and amounted to a material breach
entitling it to damages.
Count VIII alleged Sterling made a proposal to Cross-
roads on June 23, 2009, seeking to extend the termination date of
the sales and service agreement to December 31, 2012. Crossroads
alleged the proposal is an offer to substantially change and
modify the obligations of the sales and service agreement in
violations of sections 4(d)(6), 4(d)(6)(B), and 9 of the Fran-
chise Act. Count IX set forth a similar claim that Daimler
Trucks unlawfully modified the sales and service agreement in
violation of the Franchise Act.
Count X alleged Sterling violated the amended version
of section 4(d)(6)(D) of the Franchise Act that took effect on
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May 22, 2009. 815 ILCS 710/4(d)(6)(D) (West Supp. 2009).
Crossroads alleged it purchased approximately 12 new Sterling
trucks after May 22, 2009, and sold "most" of them. Sterling
maintained that Crossroads' franchise has not been terminated,
but Crossroads claims Sterling's new truck inventory will be
depleted and it will be unable to sell new trucks and the fran-
chise will come to an end. Crossroads alleged the franchise had
been terminated and not renewed without good cause in violation
of sections 4(d)(6), 4(b), 4(d)(1), 4(d)(6)(A), and 9 of the
Franchise Act. Count XI set forth a similar claim against
Daimler Trucks.
Count XII alleged in the alternative that, if termi-
nation or nonrenewal of the franchise after May 22, 2009, was
with good cause, then it was in violation of amended section 9.5
of the Franchise Act (815 ILCS 710/9.5 (West Supp. 2009)).
Crossroads alleged Sterling would terminate or fail to renew the
franchise on terms equally available to other dealers without
paying fair and reasonable compensation to Crossroads for the
value of its business and franchise. Count XIII set forth a
similar claim against Daimler Trucks.
Count XIV alleged Daimler Trucks violated section 6 of
the Franchise Act (815 ILCS 710/6 (West 2008)) by causing the
termination and/or nonrenewal of Crossroads' dealer agreement
with Detroit Diesel that prevented it from purchasing parts to
perform warranty work on Sterling trucks. Crossroads alleged the
nonrenewal of the dealer agreement was without any valid business
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reason and was designed to "economically punish" it in retalia-
tion for its refusal to sign the transition bonus program and
general release.
In December 2009, defendants filed a section 2-615
motion to dismiss the second-amended complaint. In February
2010, the circuit court entered its order dismissing 12 of the 14
counts. In dismissing counts I, II, VIII, and IX with prejudice,
the court found that even if Crossroads adequately alleged an
actual or constructive termination of the contract, such termi-
nation would be with good cause under section 4(d)(6)(D) of the
Franchise Act. The court found both the "discontinuance and
rebranding would be good cause for terminating the contract."
The court also dismissed with prejudice counts III, IV, V, VII,
X, XI, XII, and XIII. The court denied the motion to dismiss as
to counts VI and XIV, finding Crossroads alleged facts showing
Daimler Trucks had a direct interest in the Detroit Diesel
contract and that contract is covered by section 8 of the Fran-
chise Act. 815 ILCS 710/8 (West 2008).
In its order, the circuit court found no just reason to
delay the appeal. 210 Ill. 2d R. 304(a). In March 2010, Cross-
roads filed its notice of interlocutory appeal.
II. ANALYSIS
A. Subject-Matter Jurisdiction
Before responding to Crossroads' argument on appeal as
to the circuit court's partial dismissal of the second-amended
complaint, defendants argue the circuit court and this court as
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well lack subject-matter jurisdiction over the claims founded
under section 4(d)(6) of the Franchise Act (815 ILCS 710/4(d)(6)
(West 2008)). The issue of subject-matter jurisdiction cannot be
waived and may be raised at any time. Belleville Toyota, Inc. v.
Toyota Motor Sales, U.S.A., Inc., 199 Ill. 2d 325, 333-34, 770
N.E.2d 177, 184 (2002).
Section 4(d)(6) of the Franchise Act prohibits a
manufacturer from doing any of the following three acts without
proper notice:
"[(1)] to cancel or terminate the fran-
chise or selling agreement of a motor vehicle
dealer without good cause ***; [(2)] to fail
or refuse to extend the franchise or selling
agreement of a motor vehicle dealer upon its
expiration without good cause ***; or [(3)]
to offer a renewal, replacement or succeeding
franchise or selling agreement containing
terms and provisions the effect of which is
to substantially change or modify the sales
and service obligations or capital require-
ments of the motor vehicle dealer arbitrarily
and without good cause." 815 ILCS
710/4(d)(6) (West 2008).
Section 4(d)(6) also provides that the manufacturer's proposed
changes will be subject to review for good cause by the Motor
Vehicle Review Board (Review Board). 815 ILCS 710/4(d)(6)(B),
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(4)(d)(6)(C) (West 2008). The manufacturer has the burden of
proof before the Review Board to establish good cause. 815 ILCS
710/4(d)(6)(C) (West 2008).
In Clark Investments, Inc. v. Airstream, Inc., 399 Ill.
App. 3d 209, 213-14, 926 N.E.2d 408, 412-13 (2010), the Third
District reviewed the circuit court's grant of summary judgment
on sections 4(e)(8) and 4(d)(6) of the Franchise Act. The
majority considered the section 4(d)(6) claim and found the
plaintiff could not prevail on the facts. Clark Investments, 399
Ill. App. 3d at 214-15, 926 N.E.2d at 412-13.
In dissent, Presiding Justice Holdridge argued the
cause should have been dismissed for lack of jurisdiction over
the subject matter. Clark Investments, 399 Ill. App. 3d at 215,
926 N.E.2d at 413 (Holdridge, P.J., dissenting). The dissent
noted disputes between a manufacturer and a franchisee over
matters involving the Franchise Act are adjudicated under section
12, "which provides that the franchiser and franchisee must agree
to submit a dispute involving section 4, 5, 6, 7, 9, 10.1 or 11
of the Franchise Act to arbitration or to the Review Board."
Clark Investments, 399 Ill. App. 3d at 216, 926 N.E.2d at 414
(Holdridge, P.J., dissenting), citing 815 ILCS 710/12(a), (b)
(West 2008). Section 12(e) limits direct action to the circuit
court, in part, as follows:
"If the franchiser and the franchisee
have not agreed to submit a dispute to arbi-
tration, and the dispute did not arise under
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paragraph (6) of subsection (d) or paragraph
(6), (8), (10), or (11) of subsection (e) of
[s]ection 4 of this Act, then a proceeding
for a remedy other than damages may be com-
menced by the objecting franchisee in the
circuit court of the county in which the
objecting franchisee has its principal place
of business, within 60 days of the date the
franchisee received notice in writing by the
franchiser of its determination under any
provision of this Act other than paragraph
(6) of subsection (d) or paragraph (6), (8),
(10), or (11) of subsection (e) of [s]ection
4 of this Act." (Emphasis added.) 815 ILCS
710/12(e) (West 2008).
Presiding Justice Holdridge noted "[t]he Franchise Act
clearly provides that disputes involving section 4 of the Fran-
chise Act 'may' be submitted to arbitration under section 12(a)
or otherwise 'shall' be commenced by the Review Board under
section 12(b)." Clark Investments, 399 Ill. App. 3d at 216, 926
N.E.2d at 414 (Holdridge, P.J., dissenting). He also noted "only
disputes under the Franchise Act not involving section 4(d)(6) or
4(e)(8) may be commenced in the circuit court" and those two
sections specifically state the Review Board is the forum for
adjudicating disputes under those sections. Clark Investments,
399 Ill. App. 3d at 216-17, 926 N.E.2d at 414-15 (Holdridge,
- 14 -
P.J., dissenting).
Crossroads argues section 13 of the Franchise Act (815
ILCS 710/13 (West 2008)) allows a dealer to file any action in
the circuit court, including an action for damages under section
4(d)(6). Presiding Justice Holdridge noted "[t]he Franchise Act
underwent extensive revision in 1995 after our supreme court
declared former sections 4(e)(8) and 12(c) (815 ILCS 710/4(e)(8),
12(c) (West 1992)), which left good-cause determinations to the
[circuit] court, unconstitutional violations of the doctrine of
separation of powers." Clark Investments, 399 Ill. App. 3d at
217, 926 N.E.2d at 415 (Holdridge, P.J., dissenting), citing
Fields Jeep-Eagle, Inc. v. Chrysler Corp., 163 Ill. 2d 462, 479,
645 N.E.2d 946, 954 (1994). Under the new statute, the Review
Board was created and given the jurisdiction to determine good-
cause issues under section 4(e)(8) and good-faith claims under
section 4(d)(6). Clark Investments, 399 Ill. App. 3d at 217, 926
N.E.2d at 415 (Holdridge, P.J., dissenting).
While noting the majority's belief that section 13 of
the Franchise Act appeared to provide direct access to the
circuit court for a franchisee seeking monetary damages, Presid-
ing Justice Holdridge contended that "to allow a cause of action
in the circuit court where the court would have to address the
question of good cause under sections 4(d)(6) and 4(e)(8) would
ignore the purpose of the 1995 amendments, which created the
Review Board." Clark Investments, 399 Ill. App. 3d at 217-18,
926 N.E.2d at 415 (Holdridge, P.J., dissenting).
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"The 1995 amendments provided that alle-
gations of violations of sections 4(d)(6) and
4(e)(8) would be resolved by a new venue (the
Review Board). Claims for damages or injunc-
tive relief would have to wait until the
Review Board had made a determination that
sections 4(d)(6) and 4(e)(8) had been vio-
lated. If a court were to determine that a
violation of these sections had occurred, it
would be infringing upon the jurisdiction of
the Review Board." Clark Investments, 399
Ill. App. 3d at 218, 926 N.E.2d at 416
(Holdridge, P.J., dissenting).
See also Fields Jeep-Eagle, 163 Ill. 2d at 477, 645 N.E.2d at 953
(finding "[t]he independent determination of what facts are
pertinent and the assessment of those facts as they bear upon
whether a business should be allowed to operate at a given
location are not functions which courts are generally equipped to
perform or with which they should be burdened"). Presiding
Justice Holdridge believed the circuit court lacked subject-
matter jurisdiction over the claims involving sections 4(d)(6)
and 4(e)(8) and the matter should have been one for arbitration
or the Review Board. Clark Investments, 399 Ill. App. 3d at 218,
926 N.E.2d at 416 (Holdridge, P.J., dissenting).
We agree with the reasoning in Presiding Justice
Holdridge's dissent. Issues as to whether good cause existed to
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cancel or terminate a franchise or the refusal to extend the
franchise are matters best left to the arbitrator or the Review
Board under section 12(d) of the Franchise Act (815 ILCS
710/12(d) (West 2008)) and not the judiciary. See Fields Jeep-
Eagle, 163 Ill. 2d at 478-79, 645 N.E.2d at 954.
In the case sub judice, Crossroads filed a protest
before the Review Board but voluntarily dismissed it. As the
circuit court did not have subject-matter jurisdiction over the
section 4(d)(6) claims, the portions of the order dealing with
those respective claims in the second-amended complaint are void
and will not be addressed in this appeal.
B. Section 2-615 Motion To Dismiss
A motion to dismiss under section 2-615 of the Proce-
dure Code challenges only the legal sufficiency of the complaint.
Pickel v. Springfield Stallions, Inc., 398 Ill. App. 3d 1063,
1066, 926 N.E.2d 877, 881 (2010). In ruling on a section 2-615
motion to dismiss, the question is "whether the allegations of
the complaint, when viewed in a light most favorable to the
plaintiff, are sufficient to state a cause of action upon which
relief can be granted." Canel v. Topinka, 212 Ill. 2d 311, 317,
818 N.E.2d 311, 317 (2004). The trial court should not grant the
motion to dismiss "unless it is clearly apparent that no set of
facts can be proved that would entitle the plaintiff to relief."
Tedrick v. Community Resource Center, Inc., 235 Ill. 2d 155, 161,
920 N.E.2d 220, 223 (2009). We review an order granting a
section 2-615 motion to dismiss de novo. Beacham v. Walker, 231
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Ill. 2d 51, 57, 896 N.E.2d 327, 331 (2008).
1. Counts I and II
Crossroads argues the circuit court erred in dismissing
counts I (Sterling) and II (Daimler Trucks) because rebranding is
actionable under section 4(d)(6) of the Franchise Act. In its
brief, Crossroads contends rebranding of vehicles does not
qualify as "good cause" for terminating or failing to renew a
franchise under section 4(d)(6)(D). However, this issue is not
properly before us because of the lack of subject-matter juris-
diction. Therefore, we will not address it.
Crossroads also argues count I states a valid claim
under section 4(d)(1) of the Franchise Act (815 ILCS 710/4(d)(1)
(West 2008)), which makes it a violation for a manufacturer or
officer or agent thereof "to adopt, change, establish or imple-
ment a plan or system for the allocation and distribution of new
motor vehicles to motor vehicle dealers which is arbitrary or
capricious or to modify an existing plan so as to cause the same
to be arbitrary or capricious." In support of its argument,
Crossroads simply states section 4(d)(1) does not have a good-
cause element and thus count I stated a valid claim.
In looking at count I, Crossroads alleged Sterling
violated section 4(d)(1) because it arbitrarily and capriciously
modified the previously existing plan of allocation of new
Sterling trucks to Crossroads. Crossroads alleged the
"two brand strategy *** changed, established
or implemented a system for the allocation
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and distribution of Sterling[-]type trucks
that were previously labeled under both the
Sterling brand and either Freightliner or
Western Star brands and caused the
Sterling[-]type trucks to be manufactured and
labeled only as Freightliner or Western Star
brands in the future without allocating any
such trucks to Crossroads."
To survive a section 2-615 motion to dismiss, the
plaintiff "must allege specific facts supporting each element of
the cause of the action, and 'the court will not admit conclu-
sions of law and conclusory allegations not supported by specific
facts.'" Callaghan v. Village of Clarendon Hills, 401 Ill. App.
3d 287, 300, 929 N.E.2d 61, 75 (2010), quoting Visvardis v. Eric
P. Ferleger, P.C., 375 Ill. App. 3d 719, 724, 873 N.E.2d 436, 441
(2007).
Here, Crossroads' conclusory allegations in count I
that Sterling violated section 4(d)(1) by arbitrarily and capri-
ciously modifying the plan of allocating vehicles fail to state a
cause of action. Crossroads' nearly identical allegations on
section 4(d)(1) against Daimler Trucks in count II also fail to
state a cause of action. Because Crossroads does not set forth
an argument pertaining to section 9 under these two counts, we
will not address whether the allegations in the second-amended
complaint state a cause of action under that section.
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2. Count III
Crossroads argues the circuit court erred in dismissing
count III against Chris Patterson, the chief executive officer of
Daimler Trucks and president of Sterling. Crossroads claimed he
was liable for terminating its franchise without good cause in
violation of section 4(d)(6) of the Franchise Act. Because we
have no subject-matter jurisdiction over the section 4(d)(6)
claim here, we will not address it.
3. Counts VIII and IX
Crossroads argues counts VIII (Sterling) and IX (Daim-
ler Trucks) alleged a section 4(d)(6) violation based on defen-
dants' June 23, 2009, e-mail offer to renew its franchise for an
additional three years with the modification that Crossroads
would not be able to sell trucks. Because we have no subject-
matter jurisdiction over the section 4(d)(6) claim here, we will
not address it.
Crossroads also argues counts VIII and IX alleged a
violation of section 9 of the Franchise Act (815 ILCS 710/9(a)
(West 2008)), which states as follows:
"Anything to the contrary notwithstand-
ing, it shall be unlawful for the manufac-
turer, wholesaler, distributor or franchiser
without good cause, to fail to renew a fran-
chise on terms then equally available to all
its motor vehicle dealers, or to terminate a
franchise or restrict the transfer of a fran-
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chise until the franchisee shall receive fair
and reasonable compensation for the value of
the business and business premises."
"Illinois is a fact-pleading jurisdic-
tion, and a plaintiff must allege facts suf-
ficient to bring his claim within the cause
of action asserted. [Citation.] Conclusions
of fact or law unsupported by any allegation
of specific facts on which these conclusions
rest are insufficient to withstand a motion
to dismiss." Kaczka v. Retirement Board of
the Policemen's Annuity & Benefit Fund, 398
Ill. App. 3d 702, 707, 923 N.E.2d 1282, 1287
(2010).
In count VIII of its second-amended complaint, Cross-
roads alleged Sterling failed to renew its franchise on terms
equally available to other Sterling dealers because those dealers
have Detroit Diesel direct dealer agreements without paying it
fair and reasonable compensation. In count IX, Crossroads
alleged Daimler Trucks failed to renew its franchise on terms
equally available to Daimler Trucks, Freightliner, and Western
Star dealers without paying it fair and reasonable compensation.
The allegations in counts VIII and IX are nothing more
than conclusions without specific facts in support. The exhibits
mentioned in Crossroads' brief on this issue fail to shine a
light on the conclusory allegations. Thus, Crossroads failed to
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state a cause of action under section 9 of the Franchise Act in
counts VIII and IX.
4. Counts X and XI
Crossroads argues counts X (Sterling) and XI (Daimler
Trucks) stated a valid cause of action under the recent amend-
ments to the Franchise Act. Counts X and XI alleged a section
4(d)(6) termination occurring after May 22, 2009. Effective May
22, 2009, the General Assembly repealed the following language in
section 4(d)(6)(D):
"Good cause shall exist to cancel, ter-
minate, or fail to offer a renewal or re-
placement franchise or selling agreement to
all franchisees of a line make if the manu-
facturer permanently discontinues the manu-
facture or assembly of motor vehicles of such
line make." 815 ILCS 710/4(d)(6)(D) (West
2008) (repealed by Pub. Act 96-11, §5, eff.
May 22, 2009 (2009 Ill. Legis. Serv. 118, 122
(West))).
Crossroads argues since the good-cause language in
section 4(d)(6)(D) was repealed May 22, 2009, the termination of
the franchise after May 22, 2009, was without good cause under
that section. Because we have no subject-matter jurisdiction
over the section 4(d)(6) claim here, and since Crossroads does
not argue the change in the Franchise Act somehow grants us
jurisdiction, we will not address it. The remaining allegations
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on sections previously addressed also fail to state a cause of
action.
5. Counts XII and XIII
Counts XII (Sterling) and XIII (Daimler Trucks) alleged
the termination or nonrenewal of the franchise occurring after
May 22, 2009, even with good cause, entitled Crossroads to
damages under section 9.5(a) of the Franchise Act (815 ILCS
710/9.5(a) (West Supp. 2009)). Section 9.5(a) provides, in part,
as follows:
"Anything to the contrary notwithstand-
ing, if a manufacturer, wholesaler, distribu-
tor, or franchiser, with good cause, (i)
fails to renew a franchise on terms then
equally available to all of its motor vehicle
dealers, (ii) terminates a franchise, or
(iii) restricts the transfer of a franchise,
the manufacturer, wholesaler, distributor or
franchiser shall pay to the franchisee all of
the following ***." 815 ILCS 710/9.5(a)
(West Supp. 2009).
Crossroads alleged it purchased 12 new Sterling trucks
after May 22, 2009, pursuant to the terms of the sales and
service agreement with Sterling. Crossroads claimed its fran-
chise would terminate when it runs out of Sterling trucks and is
unable to purchase new trucks. In the alternative, Crossroads
alleged the termination or nonrenewal would not be on terms
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equally available to other dealers.
We find Crossroads has failed to state a cause of
action under section 9.5. The sales and service agreement
remains in effect and has not been terminated, and Sterling
offered an extension of the agreement until December 31, 2012.
Crossroads' alternative claim that the future termination or
failure to renew will not be on terms equally available to other
dealers is conclusory in nature and does not state sufficient
facts to state a cause of action.
6. Count IV
Crossroads argues count IV against Daimler Trucks
stated a valid claim for a violation of section 4(b) of the
Franchise Act and fraud in the inducement. Section 4(b) states
as follows:
"It shall be deemed a violation for any
manufacturer, factory branch, factory repre-
sentative, distributor or wholesaler, dis-
tributor branch, distributor representative
or motor vehicle dealer to engage in any
action with respect to a franchise which is
arbitrary, in bad faith or unconscionable and
which causes damage to any of the parties or
to the public." 815 ILCS 710/4(b) (West
2008).
In count IV, Crossroads alleged Daimler Trucks, prior
to October 14, 2008, caused it to invest money in Sterling
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products when at the time Patterson and others intentionally
failed to disclose the material fact that Daimler Trucks would be
discontinuing the manufacture of trucks under the Sterling brand.
Crossroads alleged the June 24, 2008, annual operating-require-
ments addendum contractually obligated it to purchase an inven-
tory of Sterling vehicles, parts, tools, and equipment. Count IV
alleged Daimler Trucks' conduct was arbitrary and in bad faith
and in violation of section 4(b) of the Franchise Act.
"In order to state a cause of action for
fraud, the plaintiff must establish the mis-
representation of a material fact which was
made for the purpose of inducing the other
party to act; that the party making the
statement knew or believed it to be false;
that the party to whom the statement was made
had a right to rely upon it and did so; and
that reliance led to the party's injury."
Penzell v. Taylor, 219 Ill. App. 3d 680, 686,
579 N.E.2d 956, 960 (1991).
In count IV, Crossroads failed to allege a misrepresen-
tation of a present fact on the part of defendants that induced
it to act. Instead, Crossroads alleged Daimler Trucks failed to
disclose it was planning to cease the manufacture of Sterling-
brand trucks. However, "[t]here is no duty to speak absent a
fiduciary or other legal relationship between the parties."
Neptuno Treuhand-Und Ver-wal-tungs-gesell-schaft MBH v. Arbor,
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295 Ill. App. 3d 567, 573, 692 N.E.2d 812, 817 (1998). Cross-
roads did not allege a fiduciary or other legal relationship
existed between it and defendants. Crossroads failed to state a
cause of action based on fraud.
Crossroads also failed to state a cause of action under
section 4(b) of the Franchise Act. Crossroads alleged Daimler
Trucks' conduct was arbitrary and in bad faith. However, given
that defendants told Crossroads the sales and service agreement
would continue, it cannot be arbitrary or an act of bad faith to
require Crossroads to comply with its contractual obligations.
7. Count V
Crossroads argues count V against Daimler Trucks states
a valid claim of tortious interference with contract. Count V
alleged Daimler Trucks tortiously interfered with Crossroads'
business relationship with Sterling causing Sterling to breach
the franchise contract by terminating or not renewing the fran-
chise without good cause in violation of section 4(d)(6) of the
Franchise Act. Because we have no subject-matter jurisdiction
over the section 4(d)(6) claim here, we will not address it.
8. Count VII
Crossroads argues its breach-of-contract claim against
Sterling in count VII should be reinstated. Count VII alleged
the failure to manufacture and produce new motor vehicles
amounted to a termination of its franchise without good cause in
violation of section 4(d)(6) of the Franchise Act. Because we
have no subject-matter jurisdiction over the section 4(d)(6)
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claim here, we will not address it.
III. CONCLUSION
For the reasons stated, we affirm the circuit court's
judgment.
Affirmed.
KNECHT and APPLETON, JJ., concur.
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