General Motors, LLC v. Ryan Motors, Inc.

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI
NO. 2017-CC-00312-COA
GENERAL MOTORS, LLC APPELLANT
v.
RYAN MOTORS, INC. APPELLEE
DATE OF JUDGMENT: 10/20/2016
TRIAL JUDGE: HON. JOHNNY LEE WILLIAMS
COURT FROM WHICH APPEALED: FORREST COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT: THOMAS A. CASEY JR.
J. ANDREW GIPSON
KAYTIE MICHELLE PICKETT
ATTORNEY FOR APPELLEE: S. ROBERT HAMMOND JR.
NATURE OF THE CASE: CIVIL - STATE BOARDS AND AGENCIES
DISPOSITION: REVERSED AND RENDERED: 11/13/2018
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE LEE, C.J., BARNES AND WESTBROOKS, JJ.
BARNES, J., FOR THE COURT:
¶1. Ryan Motors Inc. (Ryan), a Chevrolet dealer in Hattiesburg, Mississippi, filed an
administrative complaint with the Mississippi Motor Vehicle Commission (Commission)
after General Motors LLC (GM) approved the relocation request of another Chevrolet dealer
to a location ten miles from its dealership. The complaint asserted that by failing to give
Ryan notice of the other dealer’s relocation, GM violated statutory authority and its franchise
agreement with Ryan. The Commission dismissed the complaint, finding that GM was not
required to provide notice and that there was no violation. Ryan appealed the dismissal to
the Forrest County Chancery Court, which reversed the Commission’s decision. Finding the
Commission’s decision was not “arbitrary or capricious” and was supported by the evidence,
we reverse and render the chancery court’s judgment, reinstating the Commission’s findings.
FACTS AND PROCEDURAL HISTORY
¶2. Chevrolet dealer Pine Belt Motors (Pine Belt) was located in Purvis, Mississippi,
approximately thirteen miles south of Ryan’s location. Pine Belt and Ryan each had a
franchise agreement with GM, termed a GM Dealer Sales and Service Agreement (SSA).
The SSA assigns each dealer a specific geographic territory known as an “Area of Primary
Responsibility” or “APR.” Although the two dealers’ APRs were contiguous, they did not
overlap. Under Article 4.2 of the SSA, GM may revise a dealer’s APR “if [GM] determines
that marketing conditions warrant a change,” but GM is required to give thirty to sixty days’
notice to the dealer and allow the dealer to submit information either for or against the
change during that period.
¶3. In 2015, Pine Belt sought to move its dealership from Purvis to a location outside of
the Hattiesburg city limits on Highway 98, ten miles west of Ryan’s current location. The
proposed location was still within Pine Belt’s APR. On June 10, 2015, GM approved Pine
Belt’s request to relocate its dealership. Aggrieved, Ryan filed a complaint with the
Commission on September 3, 2015, alleging GM had violated Article 4.2 of the SSA and
Mississippi Code Annotated section 63-17-113 (Rev. 2013) by failing to give Ryan notice
of Pine Belt’s relocation. Section 63-17-113(1) states:
No person shall modify a franchise agreement during the term of such
agreement or upon its renewal if the modification substantially and adversely
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affects the motor vehicle dealer’s rights, obligations, investment, or return on
investment without giving sixty (60) days[’] written notice of the proposed
modification to the motor vehicle dealer and without showing good cause to
the commission.
Ryan’s argument was that GM’s approval of Pine Belt’s relocation had effectively modified
its SSA since GM may, in the future, propose a change to Ryan’s APR due to market
conditions, and the failure to give the dealer notice was a violation of due process.1 GM
denied that Ryan’s SSA had been modified, noting Pine Belt was merely relocating to an area
inside its existing APR; thus, it was not required to give Ryan notice under the statute or the
terms of the SSA.
¶4. The Commission held a hearing on November 18, 2015. Ryan presented two
witnesses: Mickey Ryan, the company’s president, and Joe Roesner, an expert witness in
dealer network analysis. Mickey Ryan testified that GM’s approval of Pine Belt’s relocation
would negatively impact Ryan’s sales. He also claimed that the relocation of Pine Belt
effectively modified Ryan’s APR and SSA and speculated that once Pine Belt began
operations in its new location, GM would change Ryan’s APR. Roesner’s testimony
concerned standard procedures typically utilized by GM in determining whether to approve
dealer relocation requests, such as market analyses.
¶5. GM brought its Regional Network Manager, David Bott, to the hearing but did not
call any witnesses. Instead, GM submitted Bott’s affidavit into evidence, in which he
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Ryan had filed an earlier complaint on August 19, which the dealer later withdrew,
conceding it lacked legal standing under the statutory authority relied upon in the complaint.
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testified that Ryan’s SSA had not been changed, and GM moved to dismiss Ryan’s
complaint. On rebuttal, Ryan requested that it be allowed to cross-examine Bott on his
affidavit and Roesner’s testimony. The hearing officer said that questions concerning
Roesner’s testimony would not be allowed, but because Bott’s affidavit was in evidence,
Ryan could cross-examine him on its contents. Ryan decided not to cross-examine Bott and
rested its case.
¶6. The Commission entered its order on December 16, 2015, concluding there was no
evidence that Ryan’s SSA had been modified. Although it did not “condone or approve of
the manner in which GM approved the relocation” of Pine Belt in opposition to the other
dealer’s wishes, the Commission found that GM did not violate section 63-17-113(1) and
dismissed the complaint.
¶7. Ryan filed an appeal with the chancery court, asserting the Commission’s findings
were “arbitrary and capricious.” Noting the Commission’s “cryptic” disapproving language
toward GM’s actions and its failure to allow Ryan the opportunity to “adequately cross-
examine” Bott, the court reversed the Commission’s decision and awarded Ryan attorney’s
fees. Ryan filed a motion to amend the judgment, requesting that the court “order GM to
withdraw its permission for relocation of Pine Belt,” or alternatively, that the court remand
the case and require GM to show “it has good cause to allow the relocation” of Pine Belt.
Opposing Ryan’s motion, GM argued that Ryan’s motion was not proper under Mississippi
Rules of Civil Procedure 59 or 60 and its “request to enjoin Pine Belt from relocating [was]
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contrary to law.” On February 6, 2017, the chancery court denied Ryan’s motion, finding its
request for injunctive relief “improper” because the court was “sitting in an appellate posture,
and not as a fact finder.”
¶8. GM appeals the chancery court’s reversal of the Commission’s decision and requests
that the agency’s dismissal of Ryan’s complaint be reinstated.
DISCUSSION
I. Whether the chancery court erred in ruling that the Commission’s
findings were “arbitrary and capricious.”
¶9. The chancery court determined that the Commission had no choice under the statute;
its “hands were essentially tied” to rule in GM’s favor. Therefore, the court found that the
Commission’s decision was “arbitrary and capricious,” as the “narrow[] tailor[ing]” of the
rules made it so Ryan had “no way to adequately challenge them.” Addressing the
Commission’s language that it did not “condone or approve” of GM’s actions, the court
concluded that not requiring GM to give Ryan notice until after the Pine Belt’s building was
completed “appears to be fundamentally deceptive, misleading and unfair.” GM argues the
chancery court improperly substituted its judgment for that of the Commission in finding the
agency’s actions were “arbitrary and capricious.”
¶10. In reviewing an agency’s decision, the appellate court determines “whether or not the
order of the administrative agency (1) was unsupported by substantial evidence, (2) was
arbitrary or capricious, (3) was beyond the power of administrative agency to make, or (4)
violated some statutory or constitutional right of the complaining party.” Tillmon v. Miss.
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State Dep’t of Health, 749 So. 2d 1017, 1020-21 (¶15). The Mississippi Supreme Court has
held:
“Arbitrary” means fixed or done capriciously or at pleasure. An act is arbitrary
when it is done without adequately determining principle; not done according
to reason or judgment, but depending upon the will alone,—absolute in power,
tyrannical, despotic, non-rational,—implying either a lack of understanding of
or a disregard for the fundamental nature of things.
“Capricious” means freakish, fickle, or arbitrary. An act is capricious when
it is done without reason, in a whimsical manner, implying either a lack of
understanding of or a disregard for the surrounding facts and settled
controlling principles.
McGowan v. Miss. State Oil & Gas Bd., 604 So. 2d 312, 322 (Miss. 1992).
A. Whether GM violated statutory authority and the terms
of the SSA.
¶11. One reason given by the chancery court for reversing the Commission’s findings was
the Commission’s “cryptic” language that it did not approve or “condone” GM’s actions.
However, GM’s counsel provided a frank and honest explanation of those comments to the
chancellor at the hearing:
I think the reason is because let’s face it; this [C]ommission is made up of
dealers. These are Mr. Ryan’s business colleagues and friends. I don’t think
it was an easy decision for them to rule in favor of [GM]. I don’t – and I mean
no disrespect for the [C]ommission whatsoever, but it is a [C]ommission made
up of car dealers, and as a manufacturer, it’s always somewhat difficult to
appear in front of the Commission like that. I think that Mr. Ryan . . . [is] an
acquaintance of most of the people who were ruling against him.
But despite its disapproval of GM’s failure to give notice, the Commission still found that
based on the evidence, there was no modification of Ryan’s SSA, and therefore, no notice
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to the dealer was required under the statute or SSA.
¶12. When presented with the latest notice of the APR dated November 1, 2015, only two
weeks before the hearing, Mickey Ryan admitted to the Commission there had been no
written modification to the dealer’s APR. Furthermore, a letter sent from Mickey Ryan to
GM on November 10, in which he requested a relocation of Ryan Motors to Highway 98,
acknowledged there had been no such modification, stating: “As my APR has not been
modified by our November 2015 [SSA], I trust that my request can be reviewed and quickly
approved.” (Emphasis added). Ryan’s expert witness, Roesner, also conceded that he had
not seen any modification to Ryan’s APR.
Q. Have you seen a written contract that has modified the APR?
A. I haven’t seen a new – no, I have not seen such a written contract.
Q. Well, so I’m just having trouble understanding how the franchise
agreement has been changed if you haven’t seen it and no one in this
room has seen it.
A. I haven’t seen such a contract, sir.
Q. Who told you that it exists?
A. Nobody told me it exists, sir.
....
Q. And is there any change in [Ryan Motors’] APR from January 2014 to
November 2015?
A. I don’t think so, no.
Q. Are you aware of any other addendum to the franchise agreement in the
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past two weeks?
A. I’m not, sir.
¶13. We find the evidence or, in this case, the lack thereof, supports the Commission’s
findings. The only basis for Mickey Ryan’s testimony that a modification of his dealership’s
SSA had occurred was GM’s letter approving Pine Belt’s relocation and his speculation that
Ryan’s APR “will change if th[at] facility is relocated.” We find this insufficient to conclude
that a modification of Ryan’s SSA had occurred. See Van Wie Chevrolet Inc. v. General
Motors LLC, 145 A.D.3d 1, 8 (N.Y. App. Div. 2016) (rejecting Van Wie’s argument that
GM’s approval of another dealer’s relocation request “ipso facto result[ed] in a modification
of [its] franchise for which notice may be required” under the applicable statute). Therefore,
because Ryan failed to produce any evidence that GM modified Ryan’s franchise agreement,
GM was under no obligation to provide the dealer with notice, either under section 63-17-
113 or the terms of the SSA.
B. Whether the Commission’s decision to restrict the cross-
examination of Bott violated Ryan’s statutory and
constitutional rights.
¶14. At the hearing before the chancery court, counsel for Ryan asserted for the first time
that the Commission violated Mississippi Annotated Code section 63-17-95 (Rev. 2013),
which states that “[a]ll parties whose rights may be affected at any hearing before the
Commission shall have the right . . . to cross-examine witnesses appearing against them[.]”
The chancery court held that not allowing Ryan “the opportunity to adequately cross-examine
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Mr. Bott” was “essentially a violation of constitutional rights; again leading the [c]ourt to
determine that the Commission’s ruling is arbitrary and capricious.”
¶15. GM argues that this issue was waived because Ryan did not raise the issue of due
process and section 63-17-95 in the briefs to the chancery court. However, Ryan did assert
in its reply brief: “Ryan tried to call Mr. Bott as a witness[,] and the Commission refused to
allow him to be questioned on anything but the affidavit. Ryan had no need to ask any
questions regarding the affidavit because GM had already confirmed that it was relying on
Ryan’s witnesses.”2 Therefore, we will address the merits of this issue.
¶16. “Administrative hearings are not trials and are thereby not governed by the same rules
which are applicable to courts of law.” Pub. Emps. Retirement Sys. v. Stamps, 898 So. 2d
664, 677 (¶45) (Miss. 2005) (citing United Cement Co. v. Safe Air for the Env’t Inc., 558 So.
2d 840, 842 (Miss. 1990)). Ryan argues section 63-17-95 provided a statutory right to cross-
examine a witness at a hearing “appearing against them” before the Commission. However,
Bott did not testify against Ryan at the hearing; only his affidavit was admitted into evidence.
The Commission’s hearing officer allowed Ryan to cross-examine Bott. Cross-examination
was simply limited to the contents of Bott’s affidavit. At that point, Ryan made the choice
not to cross-examine Bott, and counsel rested. Therefore, we cannot find that Ryan was
denied the opportunity to cross-examine the witness.
2
This assertion was the basis for Ryan’s claim that Bott’s affidavit had been waived
and was not properly in evidence because GM said it was calling him as a witness at the
hearing and failed to do so.
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¶17. We find that there was nothing “arbitrary or capricious” about the Commission’s
findings and that the chancery court substituted its judgment for that of the agency. We
reverse and render the court’s findings and reinstate the Commission’s order.
II. Whether the chancery court erred in awarding Ryan attorney’s
fees.
¶18. GM also argues the court lacked a legal basis for awarding Ryan attorney’s fees and
costs under Mississippi Code Annotated section 63-17-101 (Rev. 2013), which provides:
Any licensee suffering pecuniary loss because of any willful failure by any
other licensee to comply with any provision of the Mississippi Motor Vehicle
Commission Law or with any rule or regulation promulgated by the
commission under authority vested in it by said law may recover reasonable
damages and attorney fees therefor in any court of competent jurisdiction.
Based on our decision to reverse and reinstate the Commission’s finding that GM did not
violate any rules or regulations, we likewise reverse the chancery court’s award of attorney’s
fees to Ryan.
¶19. REVERSED AND RENDERED.
LEE, C.J., GRIFFIS, P.J., WILSON, GREENLEE, WESTBROOKS AND
TINDELL, JJ., CONCUR. IRVING, P.J., CARLTON AND FAIR, JJ., NOT
PARTICIPATING.
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