Opinion
Civil Action No. 01-10039-DPW
April 23, 2002
MEMORANDUM AND ORDER
The purchaser of a motor vehicle dealership closed the transaction without receiving approval as the successor dealer for one aspect of the dealership's operations. Conceding that he was never formally approved as the successor dealer — and in fact that his belated application was rejected — he seeks to have this court recognize and enforce his dealership status for that aspect of his operations. I find no legal basis to do so and will consequently grant defendant's motion for summary judgment.
I. BACKGROUND
On August 10, 1987, Tuck's Truck's Sales, Inc. ("Sales") and its president, Thomas Walsh, entered into a dealership agreement with Navistar International Transportation Corp. authorizing certain operations in Hudson, Massachusetts ("Navistar operations") at Walsh's motor vehicle dealership. This agreement could not be assigned by Sales or Walsh without the prior written approval of Navistar.
In April 1997, Walsh entered a purchase and sale agreement with James Boyle and Tuck's Truck's, Inc. (Boyle) for the sale of Walsh's business for $700,000. The business was essentially a General Motors Corporation ("GMC") dealership as to which the Navistar operations were a subordinate adjunct. While Boyle considered the Navistar component of the business to be somewhat significant, he acknowledged that the primary asset — the "core of the deal" — was the GMC franchise component of the Walsh's business. Boyle had previously negotiated with Navistar in 1994 for a dealership in Medford but did not receive approval.
In May 1997, Navistar sent a letter informing Boyle that a letter of intent, a business plan, and certain financial information were required as part of the application process for approval. In that letter, Navistar also stated that "Mr. Boyle needs to be sure that [the Navistar] portion of the business will generate a positive cash flow." After he received the letter, Boyle had several conversations with Jim Williams, Navistar's manager of dealer operations, in which Williams expressed concern about the viability of the Hudson dealership. Boyle spoke with Navistar representative Mark Nicholas about the application and reviewed the information requested in a letter of intent. Boyle also contends that other Navistar employees encouraged him to apply for approval from Navistar during the summer of 1997 and expressed opinions that he would be approved.
Based on the conversations he had with Navistar employees, Boyle believed that approval from Navistar would be a mere formality. He chose not to apply formally for approval from Navistar between April and September of 1997 because he did not want to proceed with the deal if GMC rejected his application for approval.
In September 1997, GMC approved the transfer of the GMC operations from Sales to Boyle. But, because he was too busy, Boyle did not file a formal application with Navistar to obtain a definite answer as to whether he would be approved to carry on the Navistar operations.
On October 3, 1997, Boyle closed the transaction with Walsh and purchased the transferable assets of Sales. At the closing, Boyle signed a letter acknowledging that Navistar had not yet approved the transaction and he agreed to waive the condition of closing that depended on Navistar's approval. Walsh agreed that Boyle could continue to operate the Navistar portion of the business until Navistar made the decision on Plaintiff's application "but in no event later than October 31, 1997." The agreement also provided that if Navistar did not approve Boyle's application then Sales would help return the Navistar parts for credit.
On October 31, 1997, Navistar sent a letter signed by Wayne J. Krzysiak, Navistar's vice president for dealer operations, to Walsh terminating the Navistar operations effective December 31, 1997. The letter also noted that Boyle had not yet filed an application. Finally, on November 4, 1997, Boyle filed a formal application, which was a copy of the GMC application, with Navistar. On November 24, 1997, Navistar sent Boyle a letter rejecting the application.
II. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits . . . show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). Consistent with this standard, I must accept the version of the facts supportably offered by the party opposing summary judgment, drawing all reasonable inferences in his favor. See, e.g., Mullin v. Raytheon Co., 164 F.3d 696, 697 (1st Cir. 1999). The potential existence of a factual dispute based on an allegation in the complaint, however, does not automatically defeat a Rule 56 motion because the adverse party cannot rest on the allegations in his pleadings where the movant supports a summary judgment motion by affidavits or other evidence. See Fed.R.Civ.P . 56(e); Baybank Middlesex v. 1200 Beacon Properties, Inc., 760 F. Supp. 957, 963 (D. Mass. 1991).
III. Discussion
A. Count I: Breach of Oral Contract
Boyle contends that an oral dealership agreement existed between him and Navistar and that Navistar breached that contract by failing to approve him as a Navistar dealer. To support a breach of contract claim under Massachusetts law, Boyle must present evidence that 1) an agreement existed between Navistar and him that was supported by consideration; 2)he was ready, willing, and able to perform; 3) Navistar's breach prevented him from performing, and 4) he suffered damages. Singarella v. City of Boston, 342 Mass. 385, 387 (1961). To establish the existence of an enforceable contract, agreement on the material terms of that contract and a present intent to be bound must be demonstrated. Situation Management Systems, Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000).
Boyle has not presented evidence of an agreement with Navistar on the material terms of a dealership agreement. In his deposition testimony, Boyle admitted there had been no agreement on such material terms as length of the agreement, grounds for termination, pricing or geographic area. He has not presented any evidence that the parties negotiated over any terms at all. He states in his brief that "[t]he parties anticipated the standard dealer agreement without any negotiation as to its terms." Boyle thus bases his argument that there was agreement on the essential terms by contending that negotiation was not needed because "these terms already exist and govern the relationship of the parties." Boyle contradicted this contention, however, when he admitted in his deposition that he understood he would have to get written approval from Navistar and a signed dealership agreement in order for a relationship to exist between the parties.
Second, Boyle has not presented evidence to support his claim that mutual assent existed between parties. Boyle bases his claim for mutual assent by stating that Navistar employees encouraged his application and opined that approval by Navistar would be a mere formality. He admitted in his deposition, however, that he understood that the employees who gave him those assurances did not have the authority to approve his application and that dealership agreements required written approval. Boyle also admitted that he was aware that he had not been formally approved by Navistar as late as October 1997 when he waived Navistar approval as a condition of his purchase of Walsh's business.
Because Boyle has failed to present any evidence supporting the existence of an enforceable contract, he cannot proceed with his claim for breach of oral contract.
B. Count II: Breach of Implied Contract
Boyle next argues that his overall relationship with Navistar implies that there was a dealership agreement in place before November 24, 1997, the date on which Navistar sent Boyle a letter rejecting his application for approval. When no express agreement exists, a contract implied in fact may be inferred from the conduct and relations of the parties.LiDonni, Inc. v. Hart, 355 Mass. 580, 583 (1969); Popponesset Beach Association v. Marchillo, 39 Mass. App. Ct. 586, 592 (1996). To recover on the grounds of implied contract, a plaintiff must show that he conferred a measurable benefit upon the defendant and that the defendant accepted the services with the expectation of compensating the plaintiff. See Bolen v. Paragon Plastics Inc., 747 F. Supp. 103, 106 n. 1 (D. Mass. 1990); Salamon v. Terra, 394 Mass. 857, 859-60 (1985) (implied-in-law); LiDonni, 355 Mass. at 583 (implied in fact). If those two criteria are met, then the law implies a promise by the defendant to pay for the value of the services rendered. Marchillo, 39 Mass. App. Ct. at 592.
Boyle must demonstrate that he presented a measurable benefit on Navistar. It is undisputed that Boyle sold Navistar parts and did warranty service work for Navistar, although it is disputed whether truck sales can be attributed to him. Next, Boyle must demonstrate that Navistar accepted his services with the expectation of compensating him and that he was not fully compensated. Boyle concedes that Navistar compensated him for his services by paying him his hourly rate for all warranty service work and for selling Navistar parts. Boyle argues that the full compensation for the "totality of his efforts, including the vehicles he sold" was the dealership agreement and contends that Navistar's conduct implies a dealership agreement for the following reasons: a Navistar representative trained him on the computer at Sales; he paid dealer charges; he used Navistar parts in the business; and he sold Navistar parts.
The evidence Boyle has presented does not sufficiently support an allegation that the parties agreed that a dealership agreement was to be part of the compensation for services rendered. Boyle has not shown that it is a custom in the trade that dealership agreements would be implied by the conduct he has described. The record instead suggests that Navistar trained Boyle to run the dealership because Walsh could not work because of health reasons. Boyle's work for Navistar — warranty service work and sales of parts — were part of the Navistar operations of Walsh's dealership and not Boyle's dealership. Walsh's Navistar operations were formally terminated on December 31, 1997. Navistar's conduct indicated that Boyle was treated as assuming the Walsh's dealer responsibilities in Walsh's absence in the capacity of a candidate as his successor. There is no evidence that Navistar considered Boyle to be a dealer of Navistar parts and trucks in his own right.
The existence of an implied in fact contract is ordinarily a question of fact for the jury. See, e.g., Mass. Cash Register, Inc. v. Comtrex Systems Corp., 901 F. Supp. 404, 424 (D. Mass. 1995). After considering the evidence presented and drawing all inferences in favor of Boyle, however, I conclude that Boyle has not presented sufficient evidence to go to a jury on the question of whether Navistar's conduct supports a claim of implied contract. In doing so, I rely on the undisputed fact that Navistar paid Boyle for the warranty service work and sales of parts.
C. Count III: HGL 93B
Boyle alleges that Navistar engaged in conduct that was arbitrary, unconscionable, and in bad faith thereby violating Mass. Gen. Laws Ch. 93B and causing him damages. Chapter 93B declares unlawful certain "unfair and deceptive acts or practices" in the automobile industry in Massachusetts. Mass. Gen. Laws. Ch. 93B § 3(a) (2002). In order to establish a right to damages or equitable relief, Boyle must establish that he is a "franchisee or motor vehicle dealer" as contemplated by this statute. Mass. Gen. Laws Ch. 93B § 12A (2002).
Boyle contends that he is a dealer as defined by this statute because he is 1) "as alleged in this lawsuit a Navistar dealer" and 2) he is a GMC dealer, so he satisfies the definition of "motor vehicle dealer" set forth in § 1(h) of the statute. As outlined in Sections II A B above, Boyle has not presented sufficient evidence to support his claim that he is a Navistar dealer.
Nevertheless, because he is a GMC dealer, Boyle may be treated as literally fitting the definition of "motor vehicle dealer" set forth in the definitional section of the statute, 93B § 1(h) (2002), which defines motor vehicle dealer as
any person who, in the ordinary course of business, is engaged in the business of selling new or used motor vehicles to consumers or other end users. It shall not include (1) receivers, trustees, administrators, executors, guardians, or other persons appointed by or acting under judgment, decree or order of any court, or (2) public officers while performing their duties as such officers."Id. § 1(h)
In Beard Motors, Inc. v. Toyota Motors Distributors, Inc., 395 Mass. 428, 433 (1985), however, the Supreme Judicial Court rejected such an interpretation as being contrary to legislative intent. There the plaintiff Beard, a Chevrolet dealer, entered a purchase and sales agreement to acquire a Toyota dealership. The agreement was expressly conditioned on the defendant Toyota's distributor's consent. Toyota did not consent and Beard sued. Toyota argued that § 12A only authorized suits by motor vehicle dealers who have a contractual relationship with the distributor or manufacturer alleged to have committed the unfair or deceptive act. The Supreme Judicial Court held that Beard lacked standing because he was merely a prospective purchaser, and not a bona fide dealer, of the Toyota dealership. Like Beard, Boyle has not demonstrated that the contractual relationship with Navistar required to be considered a dealer for purposes of Chapter 93B claim against Navistar.
Although the Beard court found in favor of the defendant, it did not expressly adopt the defendant's theory that Chapter 93B requires an actual dealership agreement between the parties. The Beard court instead concluded that the legislature enacted the statute to protect franchisees and dealers from injuries resulting from "inequality of their bargaining power and that of their affiliated manufacturers distributors." Beard, 395 Mass. at 433; see Bertera Chrysler Plymouth, Inc. v. Chrysler Corporation, 992 F. Supp. 64, 69 (D. Mass. 1998) (finding that the plaintiff had standing even without a dealership agreement because he was a current franchisee of the defendant and therefore was an "affiliated dealer").
Boyle contends that he has standing even without a formal dealership agreement because of his affiliation with Navistar through the warranty work he performed and was compensated for both before and after he took over Walsh's business in October 1997. For that reason, Boyle contends, he is "more than just a prospective transferee." While Boyle has presented evidence that he did engage in several transactions with Navistar, a review of the relevant case law does not indicate that a relationship such as his, which was clearly less than that of a franchisee would satisfy the "affiliated" dealer requirement recognized by Beard. See, e.g., Bishay v. Foreign Motors, Inc., 416 Mass. 1, 10 (1993); Greater Lowell Auto Mall, Inc. v. Toyota Motor Distribs., 35 Mass. App. Ct. 247, 250 (1993).
Because Boyle has not presented sufficient support for his claim that he is an "affiliated dealer", I conclude that he lacks standing to sue Navistar for violating Chapter 93B.
D. Count IV: Fraudulent Misrepresentation
To recover under a theory of fraud, a plaintiff must first show that the defendant knowingly made a false representation of material fact to induce the plaintiff to act in reliance on that representation and second, that the plaintiff so acted to his detriment. See, e.g., Danca v. Taunton Sav. Bank, 385 Mass. 1, 14 (1982). Boyle contends that Navistar falsely represented the nature of the application process to him before the closing by telling him that approval was a mere formality and that he detrimentally relied on those misrepresentations to waive the condition of Navistar approval when he bought the dealership with Walsh and suffered damages as a result of that reliance.
Fraudulent intent may be proved if a party knowingly makes a false statement that is "not merely a matter of opinion, estimate, or judgment but susceptible of actual knowledge" and as a general matter, "false statements of belief, of conditions to exist in the future, or of matters promissory in nature are not actionable." Mass. Cash Register, 901 F. Supp. 404, 424-25 (D. Mass. 1995) (citing Massachusetts cases). Boyle argues that Navistar fraudulently represented to him the fact that the application and dealership agreement would be a mere formality. In doing so, Boyle mischaracterizes an opinion as a statement of fact. Boyle himself admitted in his deposition that he considered the statements to be opinions. Furthermore, Boyle has not presented any evidence of fraud or intent to deceive on the part of Navistar. The record indicates that the statements made by Navistar employees were at best encouraging remarks and expressions of hope.
Had Boyle been a neophyte engaging in his first attempt to purchase a dealership, perhaps his reliance argument based on the purported encouragement of Navistar employees might be more compelling. But Boyle had previously negotiated with Navistar in 1994 and failed to receive approval for a Navistar dealership. Moreover, reservations about the viability of the Navistar operations had been expressed by Jim Williams, Navistar's manager of dealer operations, as Boyle admitted in his deposition. After having gone through the process unsuccessfully once before in Medford and having had reservations by a senior official expressed about Navistar operations at the Hudson dealership, Boyle's decision not to apply for approval in a timely fashion (and waiver of the approval as a condition of closing the dealership transactions) appears to be a business decision rather than reasonable reliance upon a factual misrepresentation.
Boyle has not presented evidence of intent to deceive on the part of Navistar. He has also not demonstrated that he reasonably relied on any Navistar representation to his detriment. For those reasons, I find that his claim of fraudulent representation must fail.
E. Count V: Chapter 93A
In order to bring a claim under Mass. Gen. Laws ch. 93A, Boyle need not prove that he was a Navistar dealer. Chapter 93A § 2 prohibits "unfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce." Thus, Section 11 authorizes any person engaged in trade or commerce who suffers loss as a result of acts or practices that violate § 2 to obtain money damages, including double or treble damages, attorney's fees and costs. Boyle alleges three specific acts that he considers unfair and deceptive: first, that Navistar did not offer legitimate business reasons for denying his application; second, that Navistar reassigned the profits from preexisting sales to other dealers while charging him dealer fees, and third, that Navistar led him to believe that he was a dealer in order to get warranty work done.
Chapter 93A itself does not provide standards for determining what constitutes an unfair or deceptive act. See PMP Associates, Inc. v. Globe Newspaper Co., 366 Mass. 593, 595 (1975). Massachusetts courts have instead looked to the interpretations of unfair acts under § 5 of the federal Trade Commission and the Federal Courts. Id. The factors considered are: 1) whether the practice falls within the penumbra of common-law, statutory, or other established concept of unfairness; 2) whether it is immoral, unethical, oppressive, or unscrupulous; and 3) whether it causes substantial injury to consumers, competitors, or other businessmen. Id. All three factors must be met for their to be a finding of unfair or deceptive action. Id. Massachusetts courts have also found a practice to have been deceptive if it "reasonably could be found to have caused the plaintiff to act differently than he otherwise would have acted." See Duclersaint v. Federal National Mortgage Association, 427 Mass. 809, 814 (1998) (citing cases).
As for the first allegation, the November 1997 letter that Navistar sent to Boyle provides adequate reasons for the denial. Navistar stated that its research showed that the market was too small to be viable. Boyle has not presented evidence that this reason was not a legitimate one.
Regarding the second allegation, Boyle has not produced documentary evidence regarding the reassignment of the truck sales. And he has failed to advance an argument explaining why such a reassignment constituted an unfair or deceptive act.
As for the third allegation, Boyle has not sufficiently supported a claim for fraudulent misrepresentation, as discussed supra.
Boyle has not established any basis upon which the acts of which he complains could be considered unfair or deceptive under the standards set forth by Massachusetts case law. For that reason, I find that he cannot bring a claim under Chapter 93A.
IV. CONCLUSION
For the reasons set forth more fully above, I hereby GRANT the motion for summary judgment on all counts.