Lafontaine Saline Inc v. Chrysler Group LLC

Michigan Supreme Court
Lansing, Michigan
Syllabus
Chief Justice: Justices:
Robert P. Young, Jr. Michael F. Cavanagh
Stephen J. Markman
Mary Beth Kelly
Brian K. Zahra
Bridget M. McCormack
David F. Viviano
This syllabus constitutes no part of the opinion of the Court but has been Reporter of Decisions:
prepared by the Reporter of Decisions for the convenience of the reader. Corbin R. Davis
LaFONTAINE SALINE, INC v CHRYSLER GROUP, LLC
Docket Nos. 146722 and 146724. Argued March 6, 2014 (Calendar No. 7). Decided
June 10, 2014.
LaFontaine Saline Inc., an authorized dealer of Chrysler motor vehicles, brought an
action for declaratory relief in the Washtenaw Circuit Court against Chrysler Group LLC and
IHS Automotive Group, LLC, under the motor vehicle dealers act (MVDA), MCL 445.1561
et seq., after receiving notice that Chrysler and IHS had signed a letter of intent (LOI) to enter
into a dealer agreement that would allow IHS to establish a Dodge dealership within nine miles
of plaintiff’s dealership if IHS satisfied certain conditions. When LaFontaine and Chrysler
entered into a dealership agreement in 2007, the MVDA limited manufacturers’ right to establish
a dealership within the relevant market area of existing dealers of the same line of vehicles,
which was defined as being within six miles; however, in August 2010, the MVDA was
amended by 2010 PA 139 to extend the six-mile radius to nine miles. Defendants moved for
summary disposition, arguing that 2010 PA 139 did not apply to the proposed dealership because
their LOI predated the act’s effective date and that 2010 PA 139 should not be applied
retroactively. The court, David S. Swartz, J., granted defendants’ motion for summary
disposition under MCR 2.116(C)(10), and denied plaintiff’s motion for reconsideration. Plaintiff
appealed. The Court of Appeals, BORRELLO, P.J., and FITZGERALD and OWENS, JJ., reversed,
concluding that the issue of retroactivity was immaterial because the LOI was not a dealer
agreement and holding that the MVDA allowed plaintiff to bring a declaratory judgment action
upon receiving notice of Chrysler’s intent to establish a like-line dealership. 298 Mich App 576(2012). The Supreme Court granted defendants’ application to appeal. 495 Mich 870 (2013).
In a unanimous opinion by Justice KELLY, the Supreme Court held:
The 2010 amendment of the MVDA that expanded the relevant market area within which
a manufacturer must give an existing vehicle dealer notice of its intention to establish a
dealership of like-line vehicles from a six-mile radius to a nine-mile radius did not apply
retroactively. A manufacturer-dealer relationship, absent contrary language in the contract,
incorporates the relevant market area in effect when the dealer agreement was entered.
Accordingly, the six-mile relevant market area in effect in 2007 governed the manufacturer-
dealer agreement at issue in this case, and summary disposition in defendants’ favor was
reinstated.
1. The version of the MVDA in effect at the time of both the 2007 Chrysler-LaFontaine
dealer agreement and the 2010 Chrysler-IHS LOI defined “dealer agreement” as requiring a
writing establishing the legal rights and obligations of the parties with regard to the purchase and
sale or resale of new motor vehicles and accessories for motor vehicles. The 2007 Chrysler-
LaFontaine dealer agreement complied with these requirements and established the parties’
contractual rights. However, the 2010 LOI between Chrysler and IHS was not a dealer
agreement under the MVDA because it did not establish these rights and obligations. Rather, the
LOI set forth requirements IHS must have met and conditions IHS must have satisfied before
Chrysler would accept its offer to enter into a dealer agreement. At most, the LOI was akin to an
agreement to agree to a dealer agreement, which was not enforceable because the document or
contract that the parties agreed to make was to contain material terms that were not already
agreed on. Chrysler and IHS therefore had no contractual rights under the 2010 LOI with which
retroactive application of the nine-mile relevant market area could have interfered.
2. The amendments of the MVDA contained in 2010 PA 139 did not apply retroactively.
Nothing in the language of 2010 PA 139 suggested the Legislature’s intent that the law apply
retroactively; retroactive application of the 2010 amendment would have impinged on Chrysler’s
rights under its dealer agreement with LaFontaine by requiring Chrysler to show good cause for
the establishment of a broader geographical range of dealerships; and retroactive application
would have granted LaFontaine greater substantive rights than the dealer agreement by allowing
LaFontaine to challenge the establishment of any such dealership when it previously could not.
Court of Appeals judgment vacated; case remanded to the trial court for reinstatement of
summary disposition in favor of defendants.
©2014 State of Michigan
Michigan Supreme Court
Lansing, Michigan
Opinion
Chief Justice: Justices:
Robert P. Young, Jr. Michael F. Cavanagh
Stephen J. Markman
Mary Beth Kelly
Brian K. Zahra
Bridget M. McCormack
David F. Viviano
FILED June 10, 2014
STATE OF MICHIGAN
SUPREME COURT
LaFONTAINE SALINE, INC., d/b/a
LaFONTAINE CHRYSLER JEEP DODGE
RAM,
Plaintiff-Appellee,
v No. 146722
CHRYSLER GROUP, LLC,
Defendant-Appellant.
____________________________________
LaFONTAINE SALINE, INC., d/b/a
LaFONTAINE CHRYSLER JEEP DODGE
RAM,
Plaintiff-Appellee,
v No. 146724
IHS AUTOMOTIVE GROUP, LLC, d/b/a
CHRYSLER JEEP OF ANN ARBOR,
Defendant-Appellant
BEFORE THE ENTIRE BENCH
KELLY, J.
This case concerns whether the 2010 amendment of the Motor Vehicle Dealer Act
(MVDA),1 expanding the relevant market area—the area within which automobile
manufacturers are required to notify an existing dealership of the manufacturer’s intent to
establish a dealership selling the same line of vehicles as that existing dealership—from a
six-mile radius to a nine-mile radius, applies retroactively. We conclude that it does not.
The 2010 Amendment of the MVDA contains no language suggesting retroactivity, and
applying the amendment retroactively would alter the parties’ existing contract rights. A
manufacturer-dealer relationship, absent contrary language in the contract, incorporates
the relevant market area in effect at the time when the dealer agreement was entered. The
six-mile relevant market area in effect in 2007, then, governs the 2007 manufacturer-
dealer agreement at issue in this case. We therefore vacate the judgment of the Court of
Appeals and remand this case to the Washtenaw Circuit Court for reinstatement of
summary disposition in favor of defendants Chrysler Group (Chrysler) and IHS
Automotive Group (IHS).
I. FACTS AND PROCEDURAL HISTORY
Chrysler and plaintiff LaFontaine Saline Inc. (LaFontaine), an authorized Chrysler
automobile dealer, entered into a Dealer Agreement on September 24, 2007. The
agreement granted LaFontaine the non-exclusive right to sell Dodge vehicles from its
1
MCL 445.1561 et seq.
2
location in Saline, Michigan, and defined LaFontaine’s Sales Locality as “the area
designated in writing to [LaFontaine] by [Chrysler] from time to time as the territory of
[LaFontaine’s] responsibility for the sale of [Chrysler, Jeep, and Dodge] vehicles, vehicle
parts and accessories . . . .” The agreement further provided that LaFontaine’s “Sales
Locality may be shared with other [Chrysler] dealers of the same line-make as [Chrysler]
determines to be appropriate.”
The parties agree that the 2007 Dealer Agreement is subject to the MVDA, which
regulates relationships among automobile manufacturers, distributors, and dealers. In
particular, the MVDA’s relevant market area provision limits Chrysler’s right to establish
dealerships of the same line of vehicles in the vicinity of LaFontaine’s existing
dealership. This section, MCL 445.1576(2), provides:
Before a manufacturer or distributor enters into a dealer agreement
establishing or relocating a new motor vehicle dealer within a relevant
market area where the same line make is represented, the manufacturer or
distributor shall give written notice to each new motor vehicle dealer of the
same line make in the relevant market area of its intention to establish an
additional dealer or to relocate an existing dealer within the relevant market
area.[2]
This notice requirement further entitles a recipient dealer to file a declaratory judgment
action requiring the manufacturer to show good cause for establishing a new dealership
within the relevant market area.3
2
Although the 2007 Dealer Agreement makes no reference to relevant market area, the
parties do not dispute that some version of the MVDA applies to the 2007 Dealer
Agreement.
3
MCL 445.1576(3) provides:
3
At the time Chrysler and LaFontaine entered into their 2007 Dealer Agreement,
MCL 445.1566(a) defined “relevant market area” as “the area within a radius of 6 miles
of the intended site of the proposed or relocated dealer.”4 Significantly, this same six-
mile radius was in effect when, on February 2, 2010, Chrysler and IHS, another Dodge
automobile dealer, entered into a “Letter of Intent to Add Vehicle Line” (LOI). The LOI
provided that Chrysler “will accept [IHS’s] offer to enter into an Agreement” to sell
Dodge vehicles upon IHS’s satisfaction of certain conditions enumerated in the LOI.5
The LOI further provided Chrysler the discretionary right to terminate the LOI should
Within 30 days after receiving the notice provided for in subsection
(2), or within 30 days after the end of any appeal procedure provided by the
manufacturer or distributor, a new motor vehicle dealer may bring a
declaratory judgment action in the circuit court for the county in which the
new motor vehicle dealer is located to determine whether good cause exists
for the establishing or relocating of a proposed new motor vehicle dealer.
Once an action has been filed, the manufacturer or distributor shall not
establish or relocate the proposed new motor vehicle dealer until the circuit
court has rendered a decision on the matter. An action brought pursuant to
this section shall be given precedence over all other civil matters on the
court's docket.
4
This former version of what is now MCL 445.1566(1)(a) applied to counties with
populations above 25,000, including Washtenaw County.
5
Specifically, as it related to the facility’s requirements, the LOI provided:
Completion of all of the requirements of this LOI to [Chrysler’s]
satisfaction within the time periods specified herein and by the Expiration
Date are material terms of this LOI. Failure to complete these requirements
within the time periods specified herein will be a material breach of this
LOI and [Chrysler] will have the right to terminate this LOI. Furthermore,
any obligation of [Chrysler] to enter into [a Dodge Sales and Service
Agreement] with You will be void and [Chrysler] will have no further
obligation to You nor any liability to You.
4
“anyone file a protest or lawsuit, demand arbitration or otherwise challenge . . . the
proposed establishment” if the challenge is not withdrawn or dismissed within 90 days of
filing.
After execution of the LOI, the Legislature expanded the statutory definition of
relevant market area from the six-mile radius to “the area within a radius of 9 miles” of
the intended site of the proposed or relocated dealership.6 Although the proposed
location for IHS’s Dodge facility is outside the pre-amendment six-mile radius of
LaFontaine’s existing dealership, it is within the post-amendment nine-mile radius of that
location. On September 3, 2010, LaFontaine contacted Chrysler, indicating its protest of
the proposed IHS Dodge dealership location in light of the nine-mile radius established
by the 2010 Amendment. Chrysler responded on October 8, 2010, communicating its
continuing intent to establish a Dodge dealership at IHS’s Ann Arbor location.
LaFontaine then filed a complaint for declaratory relief, challenging the proposed
dealership under the MVDA. Chrysler and IHS responded with a motion for summary
disposition, alleging that the 2010 Amendment did not apply to the proposed dealership
because their LOI predated the Amendment, and LaFontaine therefore had no statutory
right to challenge it. They further argued that applying the 2010 Amendment to the LOI
and to the 2007 Chrysler-LaFontaine Dealer Agreement would be an impermissible
retroactive application of the law. LaFontaine argued that its 2007 Dealer Agreement
with Chrysler did not address or refer to LaFontaine’s relevant market area, and therefore
6
MCL 445.1566(1)(a). The current nine-mile radius applies to counties with populations
above 150,000, which includes Washtenaw County. This amendment, contained in 2010
PA 139, took immediate effect upon the Governor’s signature on August 4, 2010.
5
application of the 2010 Amendment could not interfere with that agreement. Even if the
2010 Amendment applied only prospectively, LaFontaine asserted that the LOI did not
constitute a dealer agreement, but merely an agreement for certain improvements to
IHS’s facilities in anticipation of a dealer agreement. Any formal dealer agreement,
LaFontaine argued, must follow the August 4, 2010 effective date of the amendment and
be subject to the nine-mile relevant market area.
The Washtenaw Circuit Court granted Chrysler’s and IHS’s motions for summary
disposition, concluding that the 2010 Amendment did not overcome the presumption that
statutory amendments generally operate prospectively only. The Legislature provided a
specific effective date of August 4, 2010, and omitted any reference to retroactivity. The
circuit court further found that the LOI between Chrysler and IHS constituted a dealer
agreement under the MVDA, and thereby established the parties’ rights upon execution.
The court denied LaFontaine’s motion for reconsideration, adding that LaFontaine’s
claim was not ripe because it “rests on contingent future events that may not occur,” i.e.,
a formal Dealer Agreement.
The Court of Appeals reversed the circuit court in a published opinion, concluding
that the issue of retroactivity was immaterial because the LOI was not a dealer agreement
because it did not establish the “legal rights [or] obligations of [Chrysler or IHS] with
regard to the purchase and sale or resale of new motor vehicles and accessories for motor
vehicles.”7 The Court of Appeals held that any dealer agreement could necessarily occur
7
LaFontaine Saline Inc v Chrysler Group LLC, 298 Mich App 576, 588-589; 828 NW2d
446 (2012), quoting MCL 445.1562(2), as amended by 1998 PA 456 (quotation marks
omitted).
6
only after the effective date of the 2010 Amendment, and application of that amendment
could not have retroactive effect on any dealer agreement between Chrysler and IHS.8
Moreover, because the 2010 Amendment applied and the MVDA allows a dealer to bring
a declaratory judgment action upon notice of a manufacturer’s intent to establish a like-
line dealership, the Court of Appeals held that LaFontaine had standing to sue to
determine whether good cause existed for IHS’s proposed dealership.9 The Court of
Appeals denied Chrysler’s and IHS’s motions for reconsideration.
We granted Chrysler’s and IHS’s applications for leave to appeal, requesting that
the parties address:
whether the Court of Appeals erred in holding that the 2010 PA 139definition of “relevant market area,” MCL 445.1566(1)(a), applied to
enable the plaintiff to challenge the future dealer agreement between the
defendants under MCL 445.1576(3). Compare Kia Motors America, Inc v
Glassman Oldsmobile Saab Hyundai, Inc, 706 F3d 733, 735 (CA 6,
2013).[10]
II. STANDARD OF REVIEW
Chrysler and IHS moved for summary disposition under MCR 2.116(C)(8) and
(10). Summary disposition under MCR 2.116(C)(8) is appropriate where the complaint
fails to state a claim on which relief may be granted.11 A motion for summary disposition
under MCR 2.116(C)(10) challenges the factual sufficiency of the complaint, with the
8
Id. at 587-588.
9
Id. at 590-591.
10
LaFontaine Saline, Inc v Chrysler Group LLC, 495 Mich 870 (2013).
11
Spiek v Dep’t of Transp, 456 Mich 331, 333; 572 NW2d 201 (1998).
7
trial court considering the entire record in a light most favorable to the nonmoving
party.12 We review de novo a trial court’s ruling on a motion for summary disposition.13
We also review questions of statutory interpretation de novo,14 including questions
regarding retroactivity of amendments.15
III. ANALYSIS AND APPLICATION
In establishing whether the 2010 Amendment applies on the facts of this case, we
first examine the source, if any, of the parties’ contractual rights that predates the 2010
Amendment. Only then can we determine whether retroactive application of the 2010
Amendment’s expanded relevant market area would interfere with any such rights.
A. THE SOURCE OF CONTRACTUAL RIGHTS
The MVDA in effect at the time of both the 2007 Chrysler-LaFontaine Dealer
Agreement and 2010 Chrysler-IHS LOI defined “Dealer agreement” as
an agreement or contract in writing between . . . a manufacturer and a . . .
new motor vehicle dealer . . . which purports to establish the legal rights
and obligations of the parties to the agreement or contract with regard to
the purchase and sale or resale of new and unaltered motor vehicles and
accessories for motor vehicles.[16]
12
Debano-Griffin v Lake Co, 493 Mich 167, 175; 828 NW2d 634 (2013).
13
Fane v Detroit Library Comm, 465 Mich 68, 74; 631 NW2d 678 (2001).
14
Morales v Auto-Owners Insurance Co (After Remand), 469 Mich 487, 490; 672 NW2d
849 (2003).
15
Brewer v A D Transp Express, Inc, 486 Mich 50, 53; 782 NW2d 475 (2010).
16
MCL 445.1562(2), as amended by 1998 PA 456 (emphasis supplied).
8
This provision of the MVDA specifies three key elements to a Dealer Agreement: (1) a
writing (2) establishing the legal rights and obligations of the parties (3) with regard to
the purchase and sale or resale of new motor vehicles and accessories for motor vehicles.
Applying these elements to the 2007 Chrysler-LaFontaine Dealer Agreement
compels the undisputed conclusion that that agreement constitutes a “dealer agreement”
within the meaning of the MVDA. The agreement is in writing, purports to establish the
parties’ legal rights and obligations, and sets out specific “Products Covered” in a “Motor
Vehicle Addendum.” The agreement therefore complies with the requirements of then-
effective MCL 445.1562(2), and establishes the parties’ contractual rights.17 And
because MCL 445.1566(1) provided for a six-mile relevant market area at the time
Chrysler and LaFontaine entered into their Dealer Agreement, the six-mile radius will
govern that agreement unless the 2010 Amendment expanding the relevant market area is
retroactively applicable to existing dealer agreements. Indeed, it is well settled that
“the obligation of a contract consisted in its binding force on the party who
makes it. This depends upon the laws in existence when it is made. They
are necessarily referred to in all contracts, and form a part of them, as the
measure of obligation to perform them by the one party and right acquired
by the other.” The doctrine asserted in that case . . . applies to laws in
reference to which the contract is made, and forming a part of the
contract.[18]
17
The 2010 Amendment also amended the definition of “dealer agreement,” renumbered
as MCL 445.1562(3), but the scope of that amendment is immaterial here.
18
Crane v Hardy, 1 Mich 56, 62-63 (1848), quoting McCracken v Hayward, 43 US 608,
612; 11 L Ed 397 (1844) (emphasis supplied). See also State Hwy Comm’r v Detroit City
Controller, 331 Mich 337, 352; 49 NW2d 318 (1951), quoting Von Hoffman v City of
Quincy, 71 US 535, 550; 18 L Ed 403 (1866) (stating that it is “ ‘settled that the laws
which subsist at the time and place of the making of a contract, and where it is to be
performed, enter into and form a part of it, as if they were expressly referred to and
9
Before reaching the issue of retroactivity, however, we must also consider the
2010 LOI between Chrysler and IHS and whether that agreement similarly meets the
MVDA’s definition of “dealer agreement.” Like the 2007 Chrysler-LaFontaine Dealer
Agreement, the LOI between Chrysler and IHS is a writing executed by both parties.
However, while the language of this latter agreement speaks in terms of “requirements”
and “breaches,” and purports to constitute Chrysler and IHS’s “entire agreement
concerning the establishment of the Facility,” the LOI is not a “dealer agreement” within
the meaning of the MVDA because it does not establish their rights and obligations with
regard to the purchase and sale or resale of new motor vehicles and accessories for
motor vehicles, as the MVDA requires. Rather, the LOI speaks almost entirely to
requirements IHS must meet before Chrysler will “accept [IHS’s] offer to enter into an
Agreement in its then-customary form” and likewise contemplates conditions IHS must
satisfy “[b]efore [Chrysler] enters into an Agreement with [IHS] . . . .”19 At most, then,
the LOI is akin to an agreement to agree to a Dealer Agreement. While it is “ ‘well
incorporated in its terms.’ ”).
19
Indeed, at no point does the LOI purport to establish the types or numbers of
automobiles Chrysler would provide to IHS, wholesale purchase price for any such
vehicles, or any other terms relevant to the purchase and sale or resale of new motor
vehicles and motor vehicle accessories. The only semblance of any such terms occurs in
Paragraph 8 of the LOI, which provides that the precise terms “will change based on
several factors, including changes that occur in the total industry new vehicle sales,
changes in sales of new like-line vehicles in the sales locality, and changes in the number
of like-line dealers in the sales locality.” Chrysler explicitly states that it “does not
predict the number of new vehicles that [Chrysler] will sell to [IHS] or that [IHS] may
sell.” Nor does the LOI establish either party’s rights or obligations regarding the
purchase and sale or resale of new motor vehicles and accessories. Rather, it left these
terms—terms essential to a Dealer Agreement—for later determination.
10
recognized that it is possible for parties to make an enforceable contract binding them to
prepare and execute a subsequent agreement,’ ” an agreement to agree is not enforceable
where “ ‘the document or contract that the parties agree to make is to contain any
material term that is not already agreed on . . . .’ ”20 Accordingly, the LOI was not a
Dealer Agreement pursuant to MCL 445.1562(2) as was in effect at the time Chrysler and
IHS executed their LOI. Chrysler and IHS therefore had no contractual rights by way of
the 2010 LOI with which retroactive application of the nine-mile relevant market area
could interfere.
B. RETROACTIVITY
Because the 2007 Dealer Agreement between Chrysler and LaFontaine established
rights between the parties, we consider whether retroactive application of the 2010
Amendment’s nine-mile relevant market area would impermissibly deprive Chrysler of
any such rights.
To begin, we note that the 2007 Dealer Agreement between Chrysler and
LaFontaine contains no language purporting to grant LaFontaine rights against
encroachment by like-line dealers. Rather, the agreement explicitly contemplates that
LaFontaine’s “Sales Locality may be shared with other [Chrysler] dealers of the same
line-make as [Chrysler] determines to be appropriate.” This language makes clear that,
aside from any limits set out in the MVDA (i.e., the relevant market area provision),
nothing in the 2007 Dealer Agreement prevents Chrysler from reaching like-line dealer
20
Professional Facilities Corp v Marks, 373 Mich 673, 679; 131 NW2d 60 (1964),
quoting 1 Corbin, Contracts, § 29, p 68.
11
agreements with other dealerships within LaFontaine’s “Sales Locality.”21 Accordingly,
any right LaFontaine has against encroachment by like-line dealers is a creature of
statute. We consequently must determine whether the creation of a statutory right against
encroachment by the 2010 MVDA amendment, applied against Chrysler’s preexisting
2007 Dealer Agreement with LaFontaine, would result in impermissible retroactive
application.
Retroactive application of legislation “ ‘presents problems of unfairness . . .
because it can deprive citizens of legitimate expectations and upset settled
transactions.’ ”22 We have therefore required that the Legislature make its intentions
clear when it seeks to pass a law with retroactive effect.23 In determining whether a law
has retroactive effect, we keep four principles in mind. First, we consider whether there
is specific language providing for retroactive application.24 Second, in some situations,25
a statute is not regarded as operating retroactively merely because it relates to an
21
This is so even though the 2007 Dealer Agreement at no point refers to the MVDA’s
relevant market area provision. Clearly, contracting parties need not explicitly mention
an applicable statute in order for that statute to govern the transaction at hand.
22
Downriver Plaza Group v Southgate, 444 Mich 656, 666; 513 NW2d 807 (1994),
quoting Gen Motors Corp v Romein, 503 US 181, 191; 112 S Ct 1105; 117 L Ed 2d 328(1992).
23
Frank W Lynch & Co v Flex Technologies, 463 Mich 578, 583; 624 NW2d 180 (2001).
24
In re Certified Questions, 416 Mich 558, 570; 331 NW2d 456 (1982).
25
Id. at 571 (noting that “[s]econd rule cases relate to measuring the amount of
entitlement provided by a subsequent statute in part by services rendered pursuant to a
prior statute”).
12
antecedent event.26 Third, in determining retroactivity, we must keep in mind that
retroactive laws impair vested rights acquired under existing laws or create new
obligations or duties with respect to transactions or considerations already past.27 Finally,
a remedial or procedural act not affecting vested rights may be given retroactive effect
where the injury or claim is antecedent to the enactment of the statute.28
MCL 445.1566(1)(a), as amended by 2010 PA 139, provides:
(1) “Relevant market area” means . . . .
(a) In a county that has a population of more than 150,000, the area
within a radius of 9 miles of the site of the intended place of business of a
proposed new vehicle dealer or the intended place of business of a new
vehicle dealer that plans to relocate its place of business. For purposes of
this section, the 9-mile distance is determined by measuring the distance
between the nearest surveyed boundary of an existing new motor vehicle
dealer's principal place of business and the nearest surveyed boundary line
of the proposed or relocated new motor vehicle dealer's principal place of
business.
Nothing in the language of MCL 445.1566(1)(a) suggests the Legislature’s intent that the
law apply retroactively. The Legislature “ ‘knows how to make clear its intention that a
statute apply retroactively.’ ”29 In fact, it has done so with other provisions of the
MVDA, which explicitly provide that they apply to pre-existing contracts.30 The
26
Id. at 570-571.
27
Id. at 571.
28
Id.
29
Brewer, 486 Mich at 56, quoting Frank W Lynch & Co, 463 Mich at 583.
30
MCL 445.1567(1)-(2), MCL 445.1568, and MCL 445.1570 each begin with the
preface “Notwithstanding any agreement . . . .”
13
Legislature has even used specific retroactivity language when amending the MVDA.31
The Legislature’s silence regarding retroactivity in its amendment of the definition of
“relevant market area” undermines any argument that MCL 445.1566 was intended to
apply retroactively. That the Legislature provided for the law to take immediate effect
upon its filing date—August 4, 2010—only confirms its textual prospectivity.32
The remaining factors in our retroactivity analysis require that we examine the
amendment’s effect on existing contract rights. A statute’s relation to a prior event alone
will not render the statute retroactive. Rather, we consider whether the statute “takes
away or impairs vested rights acquired under existing laws, or creates a new obligation
and imposes a new duty, or attaches a new disability with respect to transactions or
considerations already past.”33 LaFontaine asserts that retroactivity is not at issue in this
case merely because it invoked the anti-encroachment protection of the 2010 amendment
after that amendment went into effect. However, this argument begs the retroactivity
question, failing to recognize that retroactive application of the 2010 Amendment would
“create a new liability in connection with a past transaction”34—namely, Chrysler’s 2007
31
See 1998 PA 456, codified at MCL 445.1582a, which provides:
The 1998 amendments to this act that added this section apply to
agreements in existence on the effective date of this section and to
agreements entered into or renewed after the effective date of this section.
32
Brewer, 486 Mich at 56 (“[P]roviding a specific, future effective date and omitting any
reference to retroactivity supports a conclusion that a statute should be applied
prospectively only.”) (quotation marks and citation omitted).
33
Hughes v Judges’ Retirement Bd, 407 Mich 75, 85; 282 NW2d 160 (1979).
34
Hansen-Snyder Co v Gen Motors Corp, 371 Mich 480, 484; 124 NW2d 286 (1963).
14
Dealer Agreement with LaFontaine. Applying the 2010 Amendment’s nine-mile relevant
market area to the parties’ 2007 agreement would impose on Chrysler the new obligation
of meeting the rigorous “good cause” standard in an action for declaratory relief under
MCL 445.1576(3). Chrysler did not bargain for or contemplate this obligation at the time
of its 2007 Dealer Agreement with LaFontaine, when the MVDA imposed only a relevant
market area of six miles. Rather, Chrysler had the settled expectation at the time of its
2007 agreement that it could establish a like-line dealership anywhere outside a six-mile
radius of LaFontaine’s place of business.
Because Chrysler explicitly reserved its right to establish such dealerships within
LaFontaine’s “Sales Locality” as refered to in the 2007 Dealer Agreement, Chrysler’s
right is contractual in nature, limited only by LaFontaine’s statutory anti-encroachment
rights in the MVDA’s relevant market area provision.35 Accordingly, retroactive
application of the 2010 Amendment would not merely “operate in furtherance of a
remedy or mode of procedure,” and therefore cannot be characterized as remedial or
procedural.36 Rather, the expansion of the relevant market area creates substantive rights
for dealers that had no prior existence in law or contract, and diminishes a manufacturer’s
existing rights under contracts executed before the 2010 Amendment. Application of the
2010 Amendment would give LaFontaine the substantive right to object where it
previously could not—that is, the right to object to a proposed like-line dealership more
35
See Dale Baker Oldsmobile, Inc v Fiat Motors of North America, Inc, 794 F2d 213,
220 (CA 6, 1986) (rejecting dealer’s argument that manufacturer’s rights under dealer
agreement were statutory rather than contractual).
36
Frank W Lynch & Co, 463 Mich at 584 (quotation marks and citation omitted).
15
than six, but less than nine miles away.37 Because retroactive application of the 2010
Amendment would interfere with Chrysler’s contractual right to establish dealerships
outside of a six-mile radius of LaFontaine, such retroactive application is impermissible
on these facts.38 Accordingly, the relevant market area in effect when Chrysler reached
its 2007 Dealer Agreement with LaFontaine governs that agreement.
Our conclusion is consistent with the recent interpretation of this exact amendment
of the MVDA by the United States Court of Appeals for the Sixth Circuit. In Kia
Motors,39 the Sixth Circuit upheld a manufacturer’s right, after the effective date of the
2010 Amendment, to establish a new like-line dealership approximately seven miles from
an existing dealership.40 In doing so, the Sixth Circuit relied on the Kia-Glassman Dealer
Agreement, which, like the 2007 Chrysler-LaFontaine Dealer Agreement here, predated
the 2010 Amendment.41
37
See Hansen-Snyder Co, 371 Mich at 484 (presumption against retroactivity is
“especially true when giving a statute retroactive operation will . . . create a new liability
in connection with a past transaction, or invalidate a defense which was good when the
statute was passed”).
38
See Byjelich v John Hancock Mut Life Ins Co, 324 Mich 54, 61; 36 NW2d 212 (1949)
(“A statute cannot be retroactive so as to change the substance of a contract previously
entered into.”).
39
Kia Motors America, Inc v Glassman Oldsmobile Saab Hyundai, Inc, 706 F3d 733 (CA
6, 2013).
40
Id. at 736-737.
41
Id. at 740-741.
16
Applying Michigan retroactivity law, the Sixth Circuit concluded that the 2010
Amendment did not apply retroactively.42 The 2010 Amendment was silent as to
retroactivity, and hence bore “no clear legislative intent that the Amendment should be
applied retroactively.”43 Moreover, Kia’s rights under its preexisting Dealer Agreement
with Glassman were vested rights, as they were contractual rather than statutory.44
Finally, the Sixth Circuit held that the amendment “[c]learly . . . imposes a new
substantive duty and provides a new substantive right that did not previously exist,” and
therefore was not procedural or remedial.45
The Sixth Circuit recognized the retroactivity issue presented by these
circumstances, contrary to the Court of Appeals below, which undertook no retroactivity
analysis whatsoever. We find the Sixth Circuit’s analysis and application of Michigan
law persuasive. Accordingly, we hold that the pre-amendment six-mile radius that was in
effect at the time Chrysler and LaFontaine entered into their 2007 Dealer Agreement
governs that agreement such that Chrysler need not show good cause for the
establishment of IHS’s proposed dealership location.
IV. CONCLUSION
The Court of Appeals erred by limiting its analysis to whether the 2010 Chrysler-
IHS Letter of Intent constituted a Dealer Agreement within the meaning of the MVDA.
42
Id. at 740.
43
Id.
44
Id.
45
Id. at 740-741.
17
While we agree with the Court of Appeals that the 2010 LOI created no substantive rights
with which application of the 2010 Amendment could interfere, Chrysler’s 2007 Dealer
Agreement with LaFontaine did create such rights. Retroactive application of the 2010
Amendment would subject Chrysler to greater burdens than those in place when the 2007
Dealer Agreement went into effect because it would require Chrysler to show good cause
for the establishment of a broader geographical range of dealerships. Likewise,
retroactive application would grant LaFontaine greater substantive rights than the 2007
agreement, allowing LaFontaine to challenge the establishment of dealerships that it
previously could not. Accordingly, retroactive application of the 2010 Amendment’s
nine-mile relevant market area would impinge upon Chrysler’s rights under its 2007
agreement with LaFontaine. Because nothing in the language of the 2010 Amendment
evinces the Legislature’s intent that the amendment apply retroactively, we decline to
give it retroactive effect. We therefore vacate the judgment of the Court of Appeals and
remand this case to the Washtenaw Circuit Court for reinstatement of summary
disposition in favor of Chrysler and IHS.
Mary Beth Kelly
Robert P. Young, Jr.
Michael F. Cavanagh
Stephen J. Markman
Brian K. Zahra
Bridget M. McCormack
David F. Viviano
18