Opinion
No. WD68390
July 8, 2008
Appeal from the Administrative Hearing Commission.
Before DIV IV: HOWARD, C.J., LOWENSTEIN and NEWTON, JJ.
INTRODUCTION
This case presents the question of whether an automobile dealership (Franchisee) can use section 407.825(1) of the Motor Vehicle Franchise Practices Act (MVFPA) to challenge the automobile manufacturer's (Franchisor's) conduct in establishing a new sales point near the franchisee's current location.
Unless otherwise noted, statutory references are to RSMo 2000, as adjusted by the 2008 supplement.
FACTS
In March 2007, Appellant Parktown Imports, Inc. (Parktown) filed an application for review before the Administrative Hearing Commission (AHC) contesting the actions of the Respondent, Audi of America, Inc. (Audi), in establishing a new motor vehicle dealership or "sales point" within ten miles of Parktown's retail facility. The application alleged that in its dealings with Parktown, which led to the decision to establish a new sales point, Audi engaged in conduct that was capricious, in bad faith, or unconscionable, and, as such, the conduct constituted an unlawful practice under section 407.825(1). Parktown further alleged that the establishment of a new sales point, especially in such close proximity to its own facility, would cause damage to Parktown. For this reason, Parktown requested an order of stay prohibiting Audi from moving forward with the new sales point pending the outcome of the AHC proceeding and prayed for relief in the form of an order finding that Audi's decision to open the new sales point was not supported by good cause and that Audi had engaged in an unlawful practice in pursuing the establishment of the sales point.
As the basis for its claim, Parktown described a series of interactions between Parktown management and representatives from Audi's office in Detroit. At the time these interactions began, Parktown was one of two Audi sales points (for sales of new automobiles) in St. Louis and the surrounding area. Its sales facility has been located on Manchester Road in Kirkwood, Missouri, for over thirty years. According to the application, Audi first mentioned the idea of a third St. Louis sales point to Parktown in September 2004 in a letter inviting Parktown to submit an application to acquire the new sales point. Through further contact, Parktown learned that this third sales point was to be a stand-alone facility, preferably located in the Chesterfield Valley area to the west of St. Louis. Parktown responded that it had no interest in relocating, that it had recently spent significant funds upgrading its current facility, and that it did not think the St. Louis market was capable of supporting three sales points. Audi then sent a letter explaining that the third sales point was not a settled decision and that it would base its ultimate decision on the quality of proposals received from area dealerships. In May 2005, Audi contacted Parktown and suggested that if Parktown were to replace its current facility with a new stand-alone facility of Audi's design, Audi would abandon its plans to establish a new sales point. In response to this suggestion, representatives from Parktown traveled to Michigan to meet with Audi management. It was there that Audi proposed that if Parktown were willing to buy out the franchise rights of Plaza Motors, the second St. Louis sales point, Audi would grant Parktown a right of first refusal to open a new sales point in the Chesterfield Valley area, and the number of sales points in the St. Louis area would remain at two. Parktown did not accept this proposal, and at a meeting in the fall of 2005, Audi informed Parktown that it was no longer pursuing a third sales point.
In the fall of 2006, Audi attempted to buy out Plaza Motors and, when Plaza refused its offer, informed Parktown that the third sales point issue had been reopened. After a series of communications, Parktown was told that due to Audi's dissatisfaction with its location and sales capacity, a third sales point would be awarded and that it would be operated by Bommarito at a location within ten miles of the Parktown facility, on the same road. Parktown alleges that the Bommarito facility will meet neither of Audi's original specifications for a third sales point, as it is not located in the Chesterfield Valley and the facility will not be a stand-alone structure. In contrast, Parktown claims, Tri-Star Mercedes, an applicant that Audi passed over, was willing to open an exclusive dealership in the Chesterfield Valley area. Parktown's application suggests that the choice was a retaliatory action on the part of Audi in response to Parktown's rejection of Audi's prior proposals. As such, Parktown claims that Audi's conduct in awarding a new sales point so close to the existing Parktown facility was capricious, in bad faith, or unconscionable.
In response to Parktown's AHC application, Audi moved to dismiss. Audi argued that the "capricious, in bad faith, or unconscionable" standard of section 407.825(1) could not be used to challenge the establishment of a new sales point. According to Audi, the legislature intended section 407.817, which deals specifically with add-point protests, to be the only means by which a dealership could contest a manufacturer's decision to create an additional sales point. Since Parktown's facility was outside the "relevant market area" from which section 407.817 add-point challenges could be brought, Audi argued that there was no statutory authority under which Parktown could challenge its decision. The AHC dismissed Parktown's application, explaining that section 407.817, as a later-enacted and more specific statute, controlled over the general prohibitions of 407.825(1) and provided the sole mechanism for add-point protests. As it found that Parktown's complaint was not cognizable under section 407.825(1), the AHC determined that it lacked jurisdiction to hear the matter. Parktown appeals this determination.
The term "add-point protest" refers to a challenge brought against the establishment of a new sales point.
In a footnote, Audi explains that, since the decision of the AHC dismissing Parktown's application for hearing, Audi has proceeded with its plan to open the new sales point and the facility is currently in operation. Audi suggests that the AHC does not have authority under the MVFPA to undo these subsequent developments, making this appeal moot. Regardless of whether the AHC has such authority, the decisions of the AHC are enforceable by the circuit court through damages, injunctive relief, or other remedies permitted by law. §§ 407.822.2; 407.835. As this proceeding could result in relief for Parktown, the case is not moot. See State ex rel. Mo. Cable Television Ass'n v. Mo. Pub. Serv. Comm'n , 917 S.W.2d 650, 652 (Mo.App. 1996).
STANDARD OF REVIEW
Factual findings of the AHC are reviewed to determine whether they are supported by substantial evidence. Tendai v. Mo. State Bd. of Registration for Healing Arts , 161 S.W.3d 358, 365 (Mo. banc 2005). De novo review is appropriate when the commission has interpreted the law or applied facts to the law. Id . Statutory interpretation and construction of statutes involves questions of law and is reviewed de novo. Cox v. Collins , 184 S.W.3d 590, 592 (Mo.App. 2006); Delta Air Lines, Inc. v. Dir. of Revenue , 908 S.W.2d 353, 355 (Mo. banc 1995).
DISCUSSION
Section 407.825 was enacted in 1980, as part of the original codification of the Motor Vehicle Franchise Practices Act (MVFPA). The section designates as "unlawful practices" certain conduct of motor vehicle franchisors (Audi) with respect to their dealership franchisees (Parktown). § 407.825. Subsection 407.825(1) refers to conduct that is "capricious, in bad faith, or unconscionable" and that "causes damage to a motor vehicle franchisee or to the public." Id . A franchisee aggrieved by such an unlawful practice can seek relief from AHC or a circuit court of competent jurisdiction. §§ 407.822.1, 407.835. Although section 407.825 has been amended twice (in 1997 and 2001), the language of subsection (1) remains functionally unchanged from the original.
These terms are not defined by the MVFPA itself. Definitions of the terms for MVFPA purposes are provided in Thoroughbred Ford, Inc. v. Ford Motor Co . See 908 S.W.2d 719, 730 (Mo.App. 1995). "Capricious" is defined as "impulsive, unpredictable"; "unconscionable" is defined as "shockingly unfair or unjust"; and "bad faith" is defined by contrast to "good faith," which is "honesty in fact in the conduct or transaction concerned." Id .
In 2001, the legislature revised several sections of the MVFPA and added section 407.817. That section addresses the creation and relocation of franchises by automobile manufacturers. See § 407.817. Section 407.817 begins by defining the term "relevant market area," as the area within a six or ten mile radius (depending on the population of the county) around the proposed site for the new or relocated dealership. § 407.817.1(1)-(2). Existing dealership franchisees within the relevant market area are granted certain protections. Before proceeding with a proposed new franchise establishment or existing franchise relocation, the manufacturer must give written notice to existing franchisees selling the same "line-make" (brand) of cars within the relevant market area. § 407.817.3. The existing franchisee then has thirty days to submit an application to the AHC for a determination of whether "good cause" exists for the establishment or relocation. §§ 407.817.4; 407.822. In evaluating the existence of "good cause," the AHC is instructed to consider the following seven factors:
The parties agree both that the six mile radius for counties with a population greater than one hundred thousand (§ 407.817.1(1)) applies here and that Parktown's facility is outside the six mile radius.
(1) Permanency of the investment;
(2) Effect on the retail motor vehicle business and the consuming public in the relevant market area;
(3) Whether it is injurious or beneficial to the public welfare;
(4) Whether the new motor vehicle dealers of the same line-make in that relevant market area are providing adequate competition and convenient consumer care for the motor vehicles of that line-make in the market area, including the adequacy of motor vehicle sales and qualified service personnel;
(5) Whether the establishment or relocation of the new motor vehicle dealer would promote competition;
(6) Growth or decline of the population and the number of new motor vehicle registrations in the relevant market area; and
(7) Effect on the relocating dealer of a denial of its relocation into the relevant market area.
§ 407.817.6. If the AHC finds a lack of good cause for the proposed establishment or relocation, the MVFPA prohibits the manufacturer from continuing with its proposal. § 407.822.2. Enforcement is available from the circuit court in the form of damages and injunctive relief. Id. ; § 407.835.
There is little doubt that, before the 2001 enactment of section 407.817, a franchisee dealership could have challenged the conduct of a manufacturer in proposing and awarding a new sales point damagingly close to that dealership's existing location as being capricious, in bad faith, or unconscionable under section 407.825(1). Thus, the question before this court is whether the addition of section 407.817 to the MVFPA statutory scheme restricts the application of section 407.825(1) to issues that do not involve the establishment or relocation of a franchise.
The primary rule of statutory construction is to ascertain the legislature's intent from the language used and to give effect to that intent, while considering the words used in their plain and ordinary meaning. Lincoln County Stone Co. v. Koenig , 21 S.W.3d 142, 146 (Mo.App. 2000). Considering the entire legislative scheme, the court must attempt to harmonize each statutory enactment. State v. Kaiser , 139 S.W.3d 545, 562 (Mo.App. 2004). It is presumed that the legislature acts with a purpose, rather than intending a useless act. Id . The court of appeals "should use rules of statutory construction to subserve rather than subvert legislative intent." Burch Food Servs., Inc. v. Mo. Div. of Employment Sec. , 945 S.W.2d 478, 480 (Mo.App. 1997). "[T]he court should not construe a statute so as to work unreasonable, oppressive, or absurd results." Id .
In support of the AHC's decision that 407.817 is the sole statutory authority under which a dealership can obtain relief from a manufacturer's conduct in the establishment of a sales point, Audi directs the court to two principles of statutory construction. The first instructs that, where one statute deals with a particular subject in a general way, and a second statute deals with the same subject in a more detailed manner, the more general statute should give way to the more specific. See Boyd v. State Bd. of Registration for the Healing Arts , 916 S.W.2d 311, 315 (Mo.App. 1995). The second principle suggested by Audi is that a chronologically later statute which functions in a particular manner will prevail over an earlier statute of a more general nature. See Moats v. Pulaski County Sewer Dist. No. I , 23 S.W.3d 868, 872 (Mo.App. 2000). These two statements, on which the bulk of Audi's argument rests, are simplified excerpts from the following paragraph:
To demonstrate the applicability of this principle, Audi cites Boyd v. State Board of Registration for the Healing Arts . In Boyd , the eastern district of this court examined two subdivisions of section 334.100.2. See 916 S.W.2d 311, 314-15 (Mo.App. 1995). At the time of the Boyd decision, the statute at issue there read as follows:
2. The board may cause a complaint to be filed with the administrative hearing commission as provided by chapter 621, RSMo, against any holder of any certificate of registration or authority, permit or license required by this chapter or any person who has failed to renew or has surrendered his certificate of registration or authority, permit or license for any one or any combination of the following causes:
. . . .
(4) Misconduct, fraud, misrepresentation, dishonesty, unethical conduct or unprofessional conduct in the performance of the functions or duties of any profession licensed or regulated by this chapter, including, but not limited to, the following:
(a) Obtaining or attempting to obtain any fee, charge, tuition or other compensation by fraud, deception or misrepresentation. . .
. . . .
(17) Knowingly making or causing to be made a false statement or misrepresentation of a material fact, with intent to defraud, for payment under the provisions of chapter 208, RSMo, or chapter 630, RSMo, or for payment from Title XVIII or Title XIX of the federal Medicare program. . . .
§ 334.100.2 RSMo 1994. The question was whether a doctor could be subject to discipline under the broadly worded subsection (4)(a) for inaccurately completing a Medicare application when he lacked the necessary element of scienter required by the more specific subsection (17). Boyd , 916 S.W.2d at 314. Noting that specific statutes generally control where the same subject matter is addressed elsewhere in a more general fashion, the Boyd court focused on the effect of finding cause for discipline under subsection (4)(a). Id . at 315-16. It explained that, if a doctor were subject to discipline under subsection (4)(a) for merely completing Medicare forms carelessly, subsection (17), with its higher standard of scienter, would be meaningless. Id . For this reason, the court found subsection (17) to be controlling with respect to discipline for improper Medicare filings. Id . at 316.
In contrast to the situation in Boyd , allowing Parktown's challenge under section 407.825(1) would not render section 407.817 meaningless. In Boyd , the two subsections at issue described types of conduct that could serve as the basis of a disciplinary action. See 916 S.W.2d at 314-15; § 334.100 RSMo 1994. Each was sufficient to trigger the same result, and one was more inclusive than the other. Therefore, if the more specific did not control, its existence could not be justified. Here, however, 407.817 offers greater and different protection to a franchisee than is available under 407.825(1). For this reason, the analysis in Boyd is not applicable.
Where there is one statute dealing with a subject in general and comprehensive terms and another dealing with a part of the same subject in a more minute and definite way, the two should be read together and harmonized, if possible , with a view to giving effect to a consistent legislative policy; but to the extent of any necessary repugnancy between them the special will prevail over the general statute. Where the special statute is later, it will be regarded as an exception to, or qualification of, the prior general one.
Laughlin v. Forgrave , 432 S.W.2d 308, 313 (Mo. banc 1968) (quoting State ex rel., McKittrick v. Carolene Prod., Co. 144 S.W.2d 153, 156 (Mo. banc 1940)). (Emphasis added). The context reveals that an earlier, more general statute should give way to a later, specific enactment only where the two address the same subject and cannot be harmonized. It is only to the extent that the statutes are inconsistent that the court should find that the later statute acts as an exception to the earlier.
It should first be noted that the two sections at issue here do not address the same subject matter. Section 407.817 prevents a manufacturer from moving forward with any plan to add a sales point when existing dealerships are within the relevant market area without first providing notification and then, if challenged by a dealership, bearing the burden of showing good cause before the AHC. Section 407.825(1), on the other hand, provides relief only from conduct of a manufacturer that is capricious, in bad faith, or unconscionable and does not require notice to the dealership of add-point proposals. While section 407.817 creates a procedural hurdle that manufacturers must address before establishing or relocating sales points within a defined range of an existing dealership, section 407.825(1) governs the business conduct of a manufacturer in dealing with its franchisees.
Even assuming that an overlap in subject matter exists between the two sections, that overlap would not establish section 407.817 as the sole means to challenge a manufacturer's conduct in adding a sales point. Laughlin instructs that, except in the case of necessary repugnancy, the two sections should be read together and harmonized, in order to give effect to a consistent legislative policy. Audi suggests that repugnancy exists in that 407.817 places standing and timing requirements on add-point protests that are not imposed on dealerships seeking relief under 407.825(1), therefore making such requirements meaningless if 407.817 is not allowed to control with respect to all disputes involving the addition of a sales point. However, the recognition of Parktown's complaint under 407.825(1) is not repugnant to the geographical standing or thirty day timing requirement of 407.817, because such recognition would not extend to Parktown the procedural advantages reserved by 407.817 for dealerships within the relevant market area. The added provisions afforded by 407.817 remain available only to those dealerships falling within the relevant market area and filing their applications in the allotted time frame. As there is no necessary repugnancy between the statutes, the proper approach is to harmonize them to effect the policy sought by the legislature. To hold otherwise would be to declare 407.825(1) repealed by the later enactment of 407.817. This court is not constrained to so hold.
By enacting the MVFPA, the legislature intended to protect Missouri's automobile dealers from the harsh economic inequalities inherent in the relationship between dealerships and manufacturers. See Stone Motor Co. v. Gen. Motors Corp. , 293 F.3d 456, 464 (8th Cir. 2002); § 407.810-835. The purpose of the Act is to level the contractual playing field between local dealership franchisees and the significantly more economically powerful manufacturers. Stone Motor Co. , 293 F.3d at 464. To this end, the MVFPA has, from its earliest enactment, protected dealerships from certain conduct by manufacturers, including coercing acceptance of inventory, coercing assent to agreements through threats of franchise cancellation, unreasonably refusing to deliver inventory, unjustifiably canceling a franchise, imposing unreasonable performance standards, prohibiting changes in franchisee management, prohibiting the association of franchisees, and, of course, generally engaging in conduct that is capricious, in bad faith, or unconscionable. See § 407.825, RSMo Supp. 1980. In 1997, the legislature added protections against manufacturer conduct such as failing to pay reasonable compensation for inventory and other items upon franchise termination, preventing the succession of an heir or devisee to the franchise, and coercing dealerships to waive rights established by the Act. See § 407.825, RSMo 2000. The 1997 amendments also provided for administrative review by adding section 407.822. In 2001, the legislature again amended various sections of the MVFPA. The changes to 407.825 provided new protections to prevent manufactures from discouraging the sale of other lines of cars by a franchisee dealership and from arbitrarily refusing to provide all cars in the manufacturer's line to a franchisee of that line. See § 407.825, RSMo Cum. Supp. 2007. In 2001, the legislature also enacted a new section, 407.817, providing a procedural hurdle for manufacturers seeking to establish or relocate a sales point within a certain proximity of an existing dealership.
Taking into account the purpose of the Act and the added provisions that increase protections for automotive dealerships, it is difficult to reach the conclusion that the legislature intended section 407.817 to limit the protections granted to dealerships rather than to expand them. It appears that the section was drafted as a preliminary roadblock to protect dealerships from unnecessary competition in markets that would not support additional sales points. The section presumes that such dealers would be injured unnecessarily by such competition and places on the manufacturer the burden of notifying the dealership and showing good cause before acting. See § 407.817.3-4; 407.822. There is no reason why section 407.817 should reduce the protections already afforded by 407.825(1). The latter section prevents capricious, bad faith, and unconscionable conduct with respect to any dealings between a manufacturer and a dealership. It would be absurd for this court to hold that, simply because the conduct of a manufacturer is related to the establishment of a new sales point and the dealership is without standing to bring an add-point protest under 407.817, the manufacturer would not be bound by the limitations placed on its conduct by 407.825(1). The AHC has jurisdiction to hear Parktown's application regarding the behavior of Audi that resulted in the addition of a sales point and the award of that point to Bommarito.
Audi cites opinions from Massachusetts and Maryland that are inconsistent with this result. See Am. Honda Motor Co., Inc. v. Bernardi's, Inc. , 735 N.E.2d 348 (Mass. 2000); Antwerpen Dodge, Ltd. v. Herb Gordon Auto World, Inc. , 699 A.2d 1209 (Md.Ct.Spec.App. 1997). As these cases were decided by the appellate courts of other states, they are not binding on this court.
In addition to its arguments based on statutory construction, Audi suggests that constitutional considerations prevent this court from finding for Parktown. Audi's first contention is that allowing Parktown's complaint under section 407.825(1) would essentially create a state-wide automatic add-point protest right and that such a scheme was found by the U.S. Court of Appeals for the Fourth Circuit to violate the dormant Commerce Clause. See Yamaha Motor Corp. U.S.A. v. Jim's Motorcycle, Inc ., 401 F.3d 560 (4th Cir. 2005). In Yamaha , the Fourth Circuit examined a Virginia statute that was similar to section 407.817, except that it required notice to and allowed protests from any existing franchisee in the state. Id . at 563-64. The court found that the Virginia statute was unnecessarily broad and unduly burdened interstate commerce, making it unconstitutional. Id . at 569-73. The effect of the statute struck down by the Fourth Circuit differs from that of the Missouri statutory scheme as construed above. Allowing a challenge to capricious, bad faith, or unconscionable conduct relating to the decision to establish a new sales point does not produce an automatic state-wide protest right. The only dealerships with standing under 407.825(1) are those who have been dealt with in a manner designated as unlawful by the legislature and who have been directly damaged by such conduct.
"[S]ection 407.825 requires that a franchisee not only prove the franchisor engaged in an unlawful practice but also that the practice directly damaged the franchisee.'" Thoroughbred Ford, Inc. v. Ford Motor Co. , 908 S.W.2d 719, 731 (Mo.App. 1995).
Audi also suggests that, under New Motor Vehicle Board of California v. Orrin W. Fox , allowing a dealership to challenge the addition of a sales point under 407.825(1) would be, in Audi's words, "tantamount to delegating the power of the state to the protesting dealer" and, thereby, a due process violation. Notably, the Court in Fox upheld a statute similar to 407.817 against a due process challenge. See New Motor Vehicle Bd. of Cal. v. Orrin W. Fox Co. , 439 U.S. 96 (1978). The Fox court also addressed Audi's concerns here, explaining,
Appellees . . . argue that the California scheme constitutes an impermissible delegation of state power to private citizens because the Franchise Act requires the Board to delay franchise establishments and relocations only when protested by existing franchisees who have unfettered discretion whether or not to protest. The argument has no merit. Almost any system of private or quasi-private law could be subject to the same objection. Court approval of an eviction, for example, becomes necessary only when the tenant protests his eviction, and he alone decides whether he will protest. An otherwise valid regulation is not rendered invalid simply because those whom the regulation is designed to safeguard may elect to forgo its protection.
Id . at 108-09. The fact that the dealership decides when to seek the protection of the MVFPA does not amount to an unconstitutional delegation of state power and does not produce a due process violation.
CONCLUSION
This court holds that the enactment of section 407.817 does not require that the provisions of 407.825(1) be held for naught where a franchisee happens to be located outside the applicable (six or ten mile) relevant market area. The AHC's dismissal of Parktown's request for review is reversed and the matter is remanded to the AHC for further proceedings.
All Concur.
Opinion Holds:
Parktown Imports, Inc., appeals the Administrative Hearing Commission's dismissal of its application for review asserting that Audi of America engaged in conduct that was capricious, in bad faith, or unconscionable, in violation of Section 407.825(1), in establishing a new motor vehicle dealership within ten miles of Parktown's dealership. The Administrative Hearing Commission dismissed the application, holding that Section 407.817 was a later-enacted, more specific statute, and therefore controlled over the general provisions of Section 407.825(1). The commission found that Section 407.817 was the sole mechanism for Parktown's protest and Audi's new sale point was outside the relevant market area from which Section 407.817 protests could be brought. The commission found that Parktown's application for review was not cognizable under the statute and dismissed the application.
This court holds that the enactment of Section 407.817 does not require that provisions of Section 407.825(1) be held for naught where a franchisee happens to be located outside the applicable relevant market area. Section 407.817 does not control over Section 407.825(1) and as Parktown Import's application for review was cognizable under Section 407.825(1), the dismissal of the application is reversed and the matter is remanded to the Administrative Hearing Commission for further proceedings.