Bill Call Ford, Inc., and Mid-Ohio Ford Jeep Eagle, Inc. v. Ford Motor Company
Docket: 93-4046
Court: Court of Appeals for the Sixth Circuit; February 27, 1995; Federal Appellate Court
Bill Call Ford, Inc. is appealing a district court's decision that granted summary judgment in favor of Ford Motor Company on all eight counts of its claim. Additionally, Call is contesting the court's approval of Ford's Motion to Compel Discovery and the associated award of attorneys' fees and costs. The dispute originated from Call's efforts to sell its Ford franchise dealership to James Graham.
Call and Ford had entered into a Sales and Service Agreement in 1980, allowing Call to operate as a Ford dealer in Mansfield, Ohio. Call submitted warranty reimbursement claims to Ford, which were calculated based on the scheduled repair times in Ford's Service Labor Time Standards Manual. After February 1985, Call alleged that Ford was reimbursing it less for warranty work compared to non-warranty work, with Call claiming the scheduled times were unfairly low. Despite complaints to Ford representatives, Call did not formally protest to the Dealer Policy Board or the Ohio Motor Vehicle Dealer's Board.
In 1982, Call sought to sell the dealership and eventually found a buyer, James Graham. They entered into a buy/sell agreement on February 3, 1989, stipulating that both parties would make efforts to secure the transfer of the Ford franchise. Ford became aware of the sale through Graham's communication with Ford's Cleveland District Sales Manager shortly after the agreement was made, during which Graham submitted an application for a Sales and Service Agreement to operate as a Ford dealer.
The court affirmed the district court's rulings, maintaining that Ford's summary judgment and discovery motion were justified, along with the award of attorneys' fees and costs.
On February 14, 1989, Ford informed Call via letter that it likely could not approve Graham's application within thirty days due to insufficient information, thereby objecting to the application under Ohio Revised Code section 4517.56(B). Ford assured Call that it would complete its review once all required information was received. Call contended that Ford already possessed the necessary details.
On March 7, 1989, Ford formally denied Graham's application, citing his poor sales performance at a previous dealership and expressing concerns about the buy/sell agreement, which Ford viewed as a significant business risk due to Graham's excessive payment to Call. However, on March 14, 1989, Tillier informed Graham by phone that he would recommend approval, albeit with conditions related to the sales agreement's duration, performance criteria, and the general manager's equity stake.
Graham, dissatisfied with these terms, along with Call, appealed to the Dealer Policy Board. On May 22, 1989, the Board upheld the recommendation but extended the initial term to four years and adjusted the performance criteria. Still unhappy, Graham and Call protested to the MVDB but later withdrew their protest on February 5, 1990, ultimately accepting the Board's earlier terms.
On March 8, 1990, Call voluntarily resigned from its Ford Sales and Service Agreement, having reviewed the agreement's termination provisions, and stated it would not seek any termination benefits. Call indicated that Ford could accept this resignation upon Graham’s appointment as a replacement dealer. Ford accepted the resignation, confirming the agreement's termination effective May 2, 1990.
On February 5, 1991, Call initiated a lawsuit against Ford, initially filing a seven-count complaint that was later amended to eight counts. The primary allegations included:
1. **Breach of Agreement**: Ford allegedly failed to timely approve Graham as the successor franchisee.
2. **Good Faith Violation**: Ford's actions were claimed to violate its duty of good faith and fair dealing under the Agreement.
3. **Tortious Interference**: Ford was accused of intentionally interfering with Call's contractual relationship with Graham.
4. **Willful Misconduct**: The actions of Ford were characterized as willful and malicious, justifying a request for treble damages.
5. **Damages Claim**: Call sought double, treble, punitive damages, and attorneys' fees based on the tort, breach of contract, and statutory violations.
6. **Compensation for Warranty Services**: Call alleged Ford failed to adequately compensate for warranty services as mandated by Ohio Revised Code § 4517.52.
7. **Statutory Violations**: Ford was claimed to have violated Ohio Revised Code § 4517.56 by its delay in approving the sale of the franchise to Graham.
8. **Unlawful Conditions**: It was alleged that Ford imposed conditions on Graham's franchise purchase that were not in the original Agreement.
Call sought $2,750,000 in damages plus any other appropriate relief. Ford responded by filing three motions for summary judgment on all counts, which the district court granted after extensive consideration, awarding Ford costs and attorneys' fees related to a motion to compel answers to interrogatories.
The appeal process noted that the review of summary judgment grants is de novo, emphasizing that it is only appropriate when no genuine issue of material fact exists, and the moving party is entitled to judgment as a matter of law. The court highlighted the importance of the Agreement's language in assessing the claims raised by Call against Ford.
Count One of the legal document addresses a breach of contract allegation made by Call against Ford, claiming Ford failed to timely approve Graham as the successor franchisee. Call's argument is based on the contractual provision stating that Ford's consent “shall not be unreasonably withheld.” Call asserts that this provision applies to the terms regarding "transfer" or "assignment" in the Agreement. Specifically, Call contends that Ford unreasonably withheld consent for fifteen months, from February 1989 to May 1990, during Call's attempt to transfer its franchise to Graham.
However, the district court rejected Call's interpretation, emphasizing the grammatical structure of the Agreement. The court ruled that the use of semicolons and the conjunction "or" in paragraph 17(b)(1) creates independent clauses, meaning that the prohibition on unreasonably withholding consent pertains solely to changes in ownership or management, as outlined in paragraph F. The court clarified that the clause regarding "transfer or attempted transfer" does not require consent and thus does not constitute a breach if consent is not granted.
Furthermore, the court interpreted "such change" in paragraph F as referring exclusively to changes in ownership or managerial authority, negating Call's argument that it could encompass an assignment without consent. The court concluded that Ford had discretion regarding consent for assignments and could not be found in breach of contract based on Call's claims.
Despite acknowledging the potential ambiguity in the phrasing of "such change," the court maintained that without evidence that Ford unreasonably withheld consent, Call could not succeed in its claim. Therefore, Call's challenge to the summary judgment motion by Ford was unsuccessful, as no evidence was presented to support its assertion that consent was unreasonably withheld.
Call claims that Ford unreasonably delayed approval of Graham as a successor franchisee for fifteen months by imposing conditions on the transfer. However, evidence shows Ford recommended Graham's approval 33 days after receiving the buy/sell agreement, and while conditions were attached, these were justified based on Graham's dealership history. Call failed to demonstrate that the conditions were unreasonable. The Dealer Policy Board approved the agreement with minor modifications within 102 days, and the prolonged delay was attributed to Call and Graham appealing Ford's terms, not Ford's actions.
In Count Two, Call alleged a breach of the duty of good faith by Ford due to the allegedly coercive delay in approving Graham, claiming it forced Call to accept a lower offer. Call cited Ohio Revised Code § 4517.59(A), which mandates franchisors to act in good faith. The district court found no evidence that Ford's delay stemmed from a desire to favor a minority dealer or that its conditions were coercive or dishonest. The court affirmed that the Agreement allowed Ford to negotiate terms with successor franchisees. It concluded that Call did not provide sufficient evidence to support claims of bad faith or unreasonable delay, leading to a summary judgment in favor of Ford.
Count Three alleges that Ford tortiously interfered with the buy/sell agreement between Call and Graham by suggesting to Graham that he was overpaying for the franchise. The district court granted Ford summary judgment, finding no evidence that Ford's statements exceeded its contractual privilege under paragraph 24 of the Agreement. This provision allows Ford to advise prospective buyers about pricing concerns without liability to Call, thus affirming the absence of any genuine factual dispute regarding this claim.
Counts Four and Five simply sought enhanced damages based on the prior claims, which the district court deemed meritless, leading to summary judgment in favor of Ford. Therefore, the district court's decision on these counts was also affirmed.
Count Six involved an alleged violation of Ohio Revised Code section 4517.52, claiming Ford failed to compensate Call adequately for warranty work. Call argued that Ford's reimbursement did not reflect the actual time required for repairs. Ford countered that Call's claim was barred because Call did not appeal to the Dealer Policy Board as mandated by paragraph 18(b) of their Agreement, which required such an appeal as a prerequisite to litigation. The district court agreed, stating that Call's warranty claim fell under this provision since the Agreement was considered "terminated," and Call failed to make the required appeal within one year.
On appeal, Call contended that the franchise was transferred rather than terminated, making the paragraph 18(b) inapplicable. Alternatively, Call argued that its warranty reimbursement claim did not constitute a "settlement of accounts," and thus should not be subject to the appeal requirement.
The district court affirmed that Call's agreement with Ford was terminated and that the warranty reimbursement claim constituted a "settlement of accounts," thereby barring Call's claim under provision 18(b) of the Agreement. In Count Seven, Call alleged Ford's failure to timely approve the sale of the franchise to Graham violated section 4517.56(B) of the Ohio Revised Code. The court found that Ford complied with the timing requirements by sending a letter of objection within the statutory timeframe after receiving notice of the proposed transfer. Thus, summary judgment in favor of Ford on this issue was deemed appropriate.
In Count Eight, Call argued that Ford's requirements for Graham to meet different franchise terms violated section 4517.56(F). However, Ford contended that applying section 4517.56(F) retroactively would impair their existing Agreement with Call, which predates the statute's enactment. The court agreed, noting that under Ohio law, statutes are presumed to operate prospectively unless explicitly stated otherwise. Since section 4517.56(F) does not indicate a retroactive effect, it was determined that the statute could not be applied to the transaction between Ford and Graham.
Call argues on appeal that the district court did not retroactively apply section 4517.56(F) of the Ohio Revised Code, asserting that such application would not be retroactive. Alternatively, Call claims the court erred in refusing to apply the statute retroactively, characterizing it as remedial rather than substantive. However, the appellate court finds that applying section 4517.56(F) to the transaction between Ford and Graham would constitute an impermissible retroactive application under Ohio law, as it would infringe on Ford's vested contractual rights. Consequently, the appellate court affirms the district court's summary judgment in favor of Ford.
Regarding the motion to compel discovery, Call contends that the district court erred in granting Ford's motion and awarding attorneys' fees and costs. The appellate court acknowledges that the trial court has broad discretion over discovery matters, and decisions are reviewed under the abuse of discretion standard. After evaluating the district court's decisions concerning two specific discovery requests, the appellate court concludes that there was no abuse of discretion. Additionally, the court finds that the award of $4,706.75 in attorneys' fees and costs was justified and not excessive, affirming the district court's decisions.
In summary, the appellate court affirms the district court's summary judgment for Ford on all counts of Call's complaint and the approval of Ford's motion to compel discovery, including the associated attorneys' fees and costs.
