Opinion
No. Wocv 2001-02108.
March 31, 2005.
MEMORANDUM AND ORDER ON DEFENDANT SUTTON MOTORS' MOTION FOR SUMMARY JUDGMENT
This case arises out of an agreement between the plaintiff and the defendants pertaining to the sale of the plaintiff's automobile franchise. In 2000, plaintiff Medway Auto Sales, Inc. ("Medway"), planned to sell its Jeep franchise to Fino Chrysler Plymouth which then planned to move the entire franchise to a location within a 20 mile radius of Defendant, Sutton Motor Sales, Inc.'s ("Sutton") Jeep franchise. Sutton objected to the sale to Fino Chrysler Plymouth, and informed Medway that it was prepared to file a compliant and challenge the proposed sale as "arbitrary" under G.L. c. 93B § 4 because it would have an adverse impact on its business. Medway filed this six-count complaint in Superior Court alleging a violation of G.L. c. 93B §§ 3 4, G.L. c. 93A, and tortuous interference with advantageous business relationships. All of the plaintiff's claims are based upon the payment of money from Medway to Sutton for Sutton to withdraw its objection to the sale of Medway's franchise. Sutton now moves for summary judgment. For the reasons discussed below, Sutton's motion is ALLOWED.
FACTUAL BACKGROUND
Corey Finkelstein, ("Finkelstein") is the sole officer and stockholder of Medway. David Hebert ("Hebert") is the president of Sutton. See Plaintiff's Memorandum, pp. 2. On November 16, 2000, Daimler Chrysler notified Hebert that Medway intended to sell the assets of its Jeep franchise to Fino Chrysler Plymouth, Inc. ("Fino"), who planned to move its Jeep franchise within a 20 mile radius of Sutton's Jeep franchise. See id. Finkelstein and Hebert discussed the proposed sale, and Hebert voiced concerns about the impact Fino's move would have on Sutton's Jeep franchise. See id. On December 14, 2000, Sutton filed a formal written objection with Daimler Chrysler to Fino's purchase of Medway. Sutton informed Daimler Chrysler that Sutton planned to petition the Superior Court as was allowed pursuant to G.L. c. 93B. See id. Finkelstein again spoke with Hebert, originally asking if Hebert would take $50,000 to withdraw his objection to the sale of Medway to Fino. See Deposition of Corey Finkelstein, pp. 13. Hebert turned down the $50,000 offer and Finkelstein offered $75,000 for Hebert to withdraw Sutton's protest. See id. See also Deposition of David H. Hebert, pp. 25. When Hebert turned down the offer of $75,000, Finkelstein asked Hebert what it would take for Hebert to withdraw Sutton's objection to the sale, and Hebert iterated it would take $200,000. See Deposition of Corey Finkelstein, pp. 13; See also Deposition of David H. Hebert, pp. 25. Finkelstein elected to accept Hebert's price. On December 12, 2000, Medway sent a written offer to Sutton's attorney offering to pay $200,000 in exchange for Sutton to withdraw its objection to Finkelstein selling Medway to Fino. See Plaintiff's Memorandum, pp. 3. Sutton subsequently withdrew its objection, and on December 21, 2000, Daimler Chrysler approved the sale, and Medway completed the sale to Fino on January 2, 2001. See id. By a letter dated January 3, 2001, Medway, through its attorney, released the $200,000 to Sutton. See id. Medway consulted with two attorneys after completion of the sale. See id. at 3-4. On October, 16, 2001, Medway's third attorney brought this action in Superior Court seeking return of the $200,000 it paid to Sutton. See id. at 4.
"(a) Unfair methods of competition and unfair or deceptive acts or practices, as defined in section 4, are hereby declared to be unlawful. (b) In construing subsection (a) the courts may be guided by the interpretations of the Federal Trade Commission Act, (c)15 U.S.C. §§ 45. The attorney general may make rules and regulations interpreting the subsection (a). The rules and regulations shall not be inconsistent with the rules, regulations and decisions of the Federal Trade Commission and the federal courts interpreting the Federal Trade Commission Act, 15 U.S.C. §§ 45." G.L. c. 93B § 3.
"It shall be a violation of subsection (a) of section 3 for any manufacturer, distributor, franchiser representative or motor vehicle dealer to engage in any action which is arbitrary, in bad faith, or unconscionable and which causes damage to the manufacturer, distributor, franchiser representative, motor vehicle dealer or to the public. . . ." G.L. c. 93B § 4(1).
". . . [a]ny manufacturer, distributor, wholesaler, distributor branch or division, factory branch or division or wholesale branch or division which intends to grant or enter into an additional franchise or selling agreement, shall . . . give written notice of its intention to do so to each motor vehicle dealer with a franchise or selling agreement covering the same line make within a twenty-mile radius of the location where the business of the proposed franchise will be located . . . [a]ny such motor vehicle dealer with a franchise or selling agreement covering the same line make as that offered to the proposed franchisee may, . . . [p]etition the superior court to determine whether such appointment is arbitrary; provided always, however, that such motor vehicle dealer first give written notice of its intention to do so. . . ." G.L. c. 93B § 4 (3)(l).
Evidence exists in the record that Hebert had paid two dealerships each $100,000 when he opened up his Jeep franchise in his location to eliminate potential objections they could have pursued under G.L. c. 93B § 4. See Deposition of Corey Finkelstein, pp. 13; See also Deposition of David H. Hebert, pp. 28. Corey Finkelstein alleges that he asked Fino if they would be willing to pay part of the $200,000 to push the sale through, but Fino refused. See Affidavit of Corey Finkelstein. Finkelstein also alleges he was in a hurry to sell Medway because of poor health and lack of crew. See id. Finkelstein claims that he had to pay the fee because his closing was imminent during the negotiations with Hebert. See id. Finkelstein notes he told Hebert he believed the $200,000 was excessive. See id.
On August 8, 2001, Sutton sold the assets of its business to Sutton Jeep, LLC. See Plaintiff's Memorandum, pp. 4.
DISCUSSION I A
Summary judgment is granted where there are no issues of material fact and when the moving party is entitled to judgment as a matter of law. Mass. R. Civ. P. 56(c); Cassesso v. Commissioner of Correction, 390 Mass. 419, 422 (1983); Community National Bank v. Dawes, 369 Mass. 550, 553 (1976). The moving party bears the burden of demonstrating affirmatively the absence of a triable issue, and that the moving party is entitled to a judgment as a matter of law. Pederson v. Time, Inc., 404 Mass. 14, 16-17 (1989). A party moving for summary judgment, not bearing the burden of proof at trial, may demonstrate the absence of a triable issue by showing that the nonmoving party has no reasonable expectation of proving an essential element of its case at trial. Flesner v. Technical Communications Corp., 410 Mass. 805, 809 (1991); Kourouvacilis v. General Motors Corp., 410 Mass. 706, 716 (1991). A moving party can meet its burden by showing the non-moving party lacks evidence to support the non-moving party's case. See Kourouvacilis, 410 Mass. at 711. Once the moving party meets that burden, the non-moving party must show by admissible evidence that there does exist a dispute as to material facts. Id. (citing Godbout v. Cousens, 396 Mass. 254, 261 (1985)). A non-moving party plaintiff must set forth specific facts showing the existence of an issue for trial. Id. (citing Mass. R. Civ. P. 56(e)); Wheatley v. American Telephone Telegraph Co., 418 Mass. 394, 397 (1994).
II A
Massachusetts General Laws, chapter 93B makes unlawful any unfair and deceptive practices among those businesses in the motor vehicle industry. In particular, "[i]t shall be deemed a violation of paragraph (a) of section three for any manufacturer, factory branch, factory representative, distributer or wholesale, distributer branch, distributer representative or motor vehicle dealer to engage in any action which is arbitrary, in bad faith, or unconscionable and which causes damage to any of said parties or to the public." Mass. G.L. c. 93B § 4 (1). Chapter 93B "was enacted to protect existing car dealerships from destructive intraband competition and the unequal economic power of manufacturers." See Richard Lundgren, Inc. v. American Honda Motor Co., Inc., 45 Mass.App.Ct. 410, 411 (1998) (quoting Heritage Jeep-Eagle, Inc. v. Chrysler Corp., 39 Mass.App.Ct. 254, 259 (1994)) (internal quotations omitted)." The third and fourth paragraphs of § 4(3)(l) go on to create a system by which a distributer contemplating the establishment of a new franchise and the existing dealers in that market area can resolve their dispute over the proposed dealership before it is actually established. A motor vehicle distributor must notify all existing dealers within a twenty-mile radius of a proposed dealership at least sixty days prior to granting a franchise or entering into a franchise agreement for that dealership. Any dealer whose "relevant market area" includes the location of the new dealership may, at any time prior to the date set for the establishment of the new franchise, petition the Superior Court to determine whether the proposed dealership would be "arbitrary", after first notifying the distributor of its intent to do so within thirty days of receiving notice of the proposed franchise." Lundgren, 45 Mass. App. Ct. at 412. Where chapter 93A is a broad prohibition on unfair and deceptive business practices, chapter 93B specifies what constitutes "unfair and deceptive" business practice in the motor vehicle industry. See Reiter Oldsmobile, Inc. v. General Motors Corp. 378 Mass. 707, 708 (1979). What acts or practices amounts to "arbitrary, in bad faith, or unconscionable" are not specifically defined, and similar to chapter 93A, no standard is set forthfor determining specific acts that are "unfair and deceptive." See Ciardi v. F. Hoffmann-LaRoche, Ltd., 436 Mass. 53, 59 (2002) (noting lack of standard under chapter 93A).
"Unfair methods of competition and unfair or deceptive acts or practices, as defined in section four, are hereby declared unlawful." Mass. G.L. c. 93B § 3. G.L. c. 93B § 4 specifically sets forth acts that violate the statute.
B
The plaintiff maintains that there was no valid agreement between the parties. An enforceable contract requires (1) an agreement between the parties on the material terms of the contact, and (2) a present intent by the parties to be bound by the agreement. See Situation Management Systems, Inc. v. Malouf, Inc., 430 Mass. 875, 878 (2000). In this case, Finkelstein asked Hebert what "it would take" for Hebert to withdraw his opposition to the sale of Medway to Fino. See Affidavit of Corey Finkelstein, pp. 2. The parties negotiated back and forth regarding an amount that would be acceptable to both. See Deposition of Corey Finkelstein; See also Deposition of David H. Hebert. Although Finkelstein admits the $200,000 amount was high, he nonetheless agreed to pay that amount to Sutton. Finkelstein did not pay the $200,000 under any reservation of rights or subject to any protest. See Plaintiff's Memorandum, pp. 3. Both parties were represented by attorneys. Finkelstein paid the $200,000 to Hebert, and Hebert formally withdrew his opposition as bargained for. See id. Based on the facts, there was a "meeting of the minds" and an "intent" by both parties to be bound by their agreement.
An otherwise valid contract may be unenforceable on the grounds that it is unconscionable because "the sum total of its provisions drives too hard a bargain for a court of conscience to assist." See Waters v. Min Ltd., 412 Mass. 64, 66 (1992) (internal citations omitted). In this case, Medway by and through Finkelstein, claims that Sutton acted unlawfully in demanding the $200,000 payment from Medway, and that he (Finkelstein) was coerced to pay the money. See Affidavit of Corey Finkelstein, pp. 3. The record evidence indicates that the parties were on equal footing. Both parties were experienced businessmen working in the same motor vehicle industry. Each party was represented by an attorney during this transaction. This is not a case involving unscrupulous business practices regarded as actionable under G.L. c. 93A. See Greenery Rehabilitation Group, Inc. v. Antaramian, 36 Mass. App. Ct. 73, 78-79 (1994) (finding defendant vender did not engage in unfair and deceptive business practices based on statements made to buyer suggesting survival of then current leases). There is nothing in G.L. c. 93B which prohibits a motor vehicle distributor who may have a statutory right to protest the location of another dealership within its market area, from insisting on the payment of money from the competing dealer in exchange for an agreement not to file a protest.
The plaintiff argues that "[t]he policy in favor of free access to the judicial system militates against characterization as improper of threats to commerce civil process, even if the claim on which the process based eventually proves to be without foundation. Nevertheless, if the threat is shown to have been made in bad faith, it is improper. Bad faith may be shown by proving that the person making the threat did not believe there was a reasonable basis for the threatened process, that he knew the threat would involve a misuse of the process or that he realized the demand he made was exorbitant." See Plaintiff's Memo, pp. 9 (citing Restatement of Contracts, 2d § 176, Comment D).
There is no basis on the record before the Court for concluding that the defendant lacked a good faith basis for lodging a protest. See Deposition of David H. Hebert, pp. 15, 17-19. The Court also notes that the plaintiff made an allegation for "tortious interference with advantageous business relationships." Though that claim was not argued by either party, the Court notes that the lack of evidence on the record to establish a G.L. c. 93A or 93B violation also indicates the lack of evidence for the "tortious interference" claim in this case.
Even if this court or an outside observer thought Sutton's price was high, the parties had a valid agreement and bargained for that agreement as equals on a level playing field. Thus, as a matter of law, on the record before the Court, Medway is unable to prove unfair and deceptive business practice.
ORDER
Based upon the reasoning above, it is hereby ORDERED that Sutton's motion for summary judgment is ALLOWED.