The opinion
STATE OF MAINE
PENOBSCOT, SS.
Darling’s d/b/a Darling’s Ford,
Plaintiff
Ford Motor Co.,
Defendant
SUPERIOR COURT
CIVIL ACTION
Docket No. CV- Ol- 14
“hy bE “4 ey
Ji. t
. ‘ rEoE *
Pet}
GARBRECHT
DONA i Lary ATAY
MAY 49 2002
Order on Cross-Motions for
Summary Judgment
FILED & ENTERED
SUPERIOR COURT
APR 09 2002
PENOBSCOT COUNTY
Pending before the court are the parties’ motions for summary judgment. In
association with the motions, the parties have filed written argument and other
submissions. The court has considered these materials.
Summary judgment is proper only if the record on summary judgment shows that
there are no genuine issues of material fact and that the movant is entitled to judgment as
a matter of law. See M.R.Civ.P. 56. To survive a motion for a summary judgment, the
opposing party must produce evid
dence that, if produced at trial, would be sufficient to
resist a motion for a judgment as a matter of law; "[t]he plaintiff must establish a prima
facie case for each element of the cause of action." Rodrigue v. Rodrigue, 1997 ME 99,
{8, 694 A.2d 924, 926.
The record on summary judgment establishes that Darling’s sells and services
new and used Ford vehicles pursuant to a franchise agreement between the parties.
Under the terms of the franchise agreement, Darling’
s performs warr
anty work on Ford
vehicles and, to the extent allowed by applicable law,’ is entitled to reimbursement from
' In its response to Darling’s statement of material fact, Ford asserted that Darling’s was
“entitled” to reimbursement only to the extent provided by Maine law and the terms of
the parties’ franchise agreement. Ford made no record reference to any portion of the
Ford for costs associated with the labor and parts. In order to receive that reimbursement,
Darling’s submits a warranty claim to the defendant. Ford reimburses Darling’s at a
national rate, which is below the rate authorized under Maine law. See 10 M.R.S.A. §
1076 (providing that franchisees shall be paid for parts and labor associated with
warranty work, at the retail rates customarily charged by that franchisee for non-warranty
work). Darling’s then submits a second claim seeking reimbursement for the difference
between the statutorily required rate and Ford’s national rate. In connection with the
eight claims at issue in this case, Ford approved the claims within 30 days of their
submission, and Ford then paid those claims. Subsequently, more than 30 days after Ford
received the claims from Darling’s, Ford “charged back” the earlier claim approvals.
These “charge backs” had the effect of reversing the decisions to approve the claims that
Darling’s had submitted on the warranty work.
When Ford receives a warranty claim from a franchisee such as Darling’s, the
claim is approved if it is in proper form. Following that approval, Ford reviews some of
- those claims. Ford’s decision of whether to review specific claims is influenced by the
nature and number of warranty claims previously submitted by that franchisee. Prior to
June 2000, Darling’s warranty claim history had prompted Ford to initiate a “Warranty
Counseling Process” for Darling’s. As part of this process, prior to June 2000 Ford
notified Darling’s of its concerns regarding Darling’s’ warranty work practices.
Additionally, Ford had conducted an “initial warranty review” and then a “warranty
g Process are set
out in an agreement between the parties. As part of Ford’s warranty review follow-up, in
August 2000 it reviewed the claims at issue in this case, concluded that they were not
proper claims and charged back the payments that it had previously authorized.
Title 10 M.R.S.A. § 1176 requires a motor vehicle franchisor, such as Ford, to
either approve and pay a warranty claim submitted by franchisees or disapprove such a
claim. Such action must be taken within 30 days of the date the franchisor receives such
aclaim. When a warranty claim is disapproved, the franchisor must provide written
agreement, and this part of its response is therefore insufficient. See Biette v. Scott Dugas
Trucking & Excavating, Inc., 676 A.2d 490, 494 (Me. 1996). The reference to Maine
law, on the other hand, is a legal matter rather than a factual one, and therefore it is a
proper one.
notice of the disapproval and the reasons the warranty claim was rejected. Id. Section
1176-A then provides:
A manufacturer may reasonably and periodically audit a new motor vehicle dealer
to determine the validity of paid claims or any charge-backs for customer or
dealer incentives. Audits of incentive payments may be only for the 18-month
period immediately preceding the date notifying the dealer that an audit is to be
conducted.
Here, the record on summary judgment establishes that Ford approved and paid
Darling’s warranty claims in a way that was timely under section 1176. However, the
parties dispute whether section 1176-A then authorizes Ford to take steps that amount to
a reversal of those claim approvals through the warranty review process. The issues
raised by the parties’ cross-motions turn on the construction of sections 1176 and
1176-A. The Law Court has established the following principles of statutory
construction: "When construing a statute, 'we look to the plain meaning of the language
to give effect to the legislative intent.'... Additionally, we consider the statutory scheme
as a whole in order to reach a harmonious result. . . .Lastly, '[w]e avoid statutory
constructions that create absurd, illogical, or inconsistent results.’ Fairchild
Semiconductor Corp v. State Tax Assessor, 1999 ME 170, | 7, 740 A.2d 584, 587
(internal citations omitted).
Here, in section 1176, the Legislature imposed obligations on a motor vehicle
franchisor arising from warranty work performed by franchisees on vehicles
manufactured by that franchisor. Those obligations encompass the amount of
reimbursement due to the franchisee (namely, the retail rate for both parts and labor
charged by that franchisor for non-warranty work) and the time within which the
franchisor must take action on the warranty claim (namely, 30 days to pay or disapprove
the claim). The next statutory provision, section 1176-A, authorizes the franchisor to
“reasonably and periodically audit a new motor vehicle dealer to determine the validity of
paid claims... .” The Legislature chose not to define the term “paid claims.” However,
the plain meaning of that phrase would include a paid warranty claim within its scope.
Further, its very juxtaposition to the statute controlling the payment of warranty claims
indicates that one type of a “paid claim” under section 1176-A is a warranty claim that is
paid pursuant to section 1176 itself.
Darling’s argues that this construction would defeat the apparent purpose of
section 1176, which is to require the prompt settlement of warranty claims submitted by
franchisees. First, this argument is weakened by the plain language of section
1176-A, which expressly permits a franchisor to conduct an audit of “paid claims.” Here,
Ford paid the warranty claims submitted by Darling’s. The terms of section 1176-A then
contemplate the very action taken here by Ford, namely, an audit of those claims that
were paid previously. Further, the putative objective of section 1176 is not
fundamentally undermined by a provision that permits a franchisor to review and
examine paid claims, so long as those audits are conducted “reasonably and periodically.”
Darling’s also points to the legislative history accompanying the enactment of
section 1176-A as evidence of the Legislature’s intention that an audit under that section
does not include audits of warranty claims. The proposed legislation that ultimately
resulted in the enactment of section 1176-A also included a host of other proposals
relating to the business practices of motor vehicle franchisors and franchisees out in 10
MLR.S.A. §§ 1171 et seg. As drafted in this L-D., section 1176-A limited audits to
“manufacturer rebate[s], incentive[s] and other similar program[s]....” The proposed
summary to the original bill expressly noted that the proposed legislation would
“establish[] standards to be applied in manufacturer audits... .” L.D. 1747, 118" Leg.
(attached to plaintiffs motion as exhibit A). Additionally, as the bill was first framed, the
new legislation would provide guidance to the courts in their efforts to glean the
L.D. 1747 was amended after committee review. See Committee Amendment |
“A,” L.D. 1747, 118" Leg. (attached to plaintiff’s motion as exhibit B). There, proposed
section 1176-A was given its final form. In contrast to the earlier draft, the nature of
audits permitted by section 1176-A was broadened to include those for “paid claims or
any charge-backs for customer or dealer incentives.” Further, the proposed summary
indicated that the provision “establishes an 18-month time limitation on audits.” The
summary also provides, “It [the bill] specifically does not address warranty
? The proposed legislative summary made specific reference to Acadia Motors, Inc. v.
Ford Motor Co., 44 F.3d 1050 (1* cir. 1995), in which the First Circuit engaged in a
lengthy analysis attempting to discern the Legislature’s intention underlying section
1176. Id. at 1055-58.
reimbursement of parts and labor in” section 1176 and that, in distinction to the summary
in the earlier draft of the bill, the courts should not use the proposed legislation as a tool
to determine legislative intent in pending proceedings regarding section 1176, including
Acadia Motors, Inc. See note 2.
The court gains little from this confusing and unenlightening legislative history.
If anything, the evolution of the statute through the legislative process appears to reflect
an expansion of the types of audits that a franchisor could conduct. This demonstrated by
the amendments affecting then-proposed section 1176-A itself. Further, the summary’s
reference to “an 18-month time limitation on audits” is even broader than the language of
section 1176-A would suggest, because the statute itself is limited to audits for “paid
claims” and for incentive programs. If the court gave this statement controlling effect
here, then section 1176-A would have a broader application than either of the parties
suggest, and by itself this datum would undermine the piaintiff’s argument. Finally, the
Legislature evidently concluded that it did not want the new enactments to be seen as a
reflection of its intent underlying previous formulations of section 1176, which was the
subject of recent litigation. However, the court views this disclaimer as relating only to
- cases involving issues such as those addressed in Acadia Motors and others, which
involved the amount of any section 1176 reimbursement for warranty claims and the
manner in which the franchisors could absorb those costs. Section 1176-A, of course,
was not implicated in any of those cases, because that section was not yet been enacted.
language of section 1176-A. From this, the court concludes that Ford was authorized to
conduct an audit, as it did here, of Darling’s warranty claims, even though Ford had
already paid those claims pursuant to section 1176.
The second sentence of section 1176 creates an 18 month deadline in which the
franchisor is authorized to conduct audits of incentive payments. This does not address
the other type of audit noted in the first sentence of section 1176, which is an audit of
“paid claims” and which is the type of audit at issue in this case.> Because the
* Although the plaintiff argues that the audits noted in the first and second sentences of
section 1176 are co-extensive, the court expects that a “paid claim” is quite different from
an “incentive payment.” The former has connotations of a legal liability - such as would
Legislature chose not to impose such a limitation on audits of “paid claims,” the propriety
of such a claim is limited by the statutory requirement that it must be reasonable.
Darling’s sole argument in support of its motion for summary judgment and in opposition
to Ford’s own motion for summary judgment is that section 1176-A is inapplicable in this
case. Darling’s has not argued that if section 1176-A is applicable, Ford’s audit was
untimely.* Therefore, Darling’s has waived any such challenge to Ford’s argument that it
acted properly under section 1176-A.°
Therefore, from this record, the court concludes that Ford was authorized
statutorily to audit the warranty charges that it previously approved and, as a necessary
part of that audit process, to charge back those amounts.
The entry shall be:
For the foregoing reasons, Darling’s motion for summary judgment is denied.
Ford Motor Company’s motion is granted. Summary judgment is entered for the
result from performance under a warranty, followed by an obligation of a third party (as a
franchisor) to reimburse the party who performed the warranty work. This is wholly
different from payment used to reduce the buyer’s purchase cost.
* Darling’s argues that its “quarrel with Ford is that it uses a so-called warranty audit
process to undermine and circumvent the deadlines set forth in 10 M.R.S.A. § 1176. ...
[N]Jo audit rights are allowed under the statute.” “Plaintiff's Reply to Defendant’s
Opposition to Plaintiff's Motion for Summary Judgment and to Defendant’s Cross
Motion for Summary Judgment” at pp. 1-2.
* Even if Darling’s argued in the alternative that Ford’s audit of Darling’s warranty
claims was unreasonable and thus barred by section 1176-A, that argument could not be
sustained on the present record. In its statement of material fact, Ford has established the
process of the audit, the contractual authority supporting the audit, the reasons why it was
entitled to conduct the audit in the circumstances of this case and the connection between
the audit and the charge-backs. In its opposing statement of material fact, Darling’s did
not dispute those assertions (although Darling’s objected to their materiality). Therefore,
the historical facts are established in this record. When the facts are undisputed, the
resulting legal conclusions may be drawn even in the context of a summary judgment
motion. North East Ins. Co. v. Soucy, 1997 ME 106, { 8, 697 A.2d 1141, 1143. Here, if
the evidence set out in the present record were the only evidence presented at trial, a
factfinder could conclude only that the audit was reasonable.
defendant. The defendant is awarded its costs of court.
4
Dated: April 8, 2002 WW
J ustic¥, Maing] Superior Court
STATE OF MAINE SUPERIOR COURT
PENOBSCOT, SS. CIVIL ACTION
Docket No. CV-01-14
Darling’s d/b/a Darling’s Ford,
Plaintiff
‘
f
V. ORDER AFTER REMAND
Ford Motor Co.,
Defendant
Following a post-remand conference of counsel, the parties have filed written
submissions setting out their positions on the nature of the issues that remain pending;
Darling’s contends that the only remaining questions relate to remedial issues, and Ford
urges that liability issues also remain outstanding. The court has considered those
submissions.
In its complaint, Darling’s alleged that Ford violated the provisions of 10
MLR.S.A. § 1176 when it charged Darling’s back against credits it previously approved
for warranty work performed by Darling’s on Ford vehicles. Ford moved to dismiss the
claim in part on the ground that section 1176-A authorized it to make those charge backs.
(Ford’s motion was also based on two other arguments that are not pertinent here.) After
the court denied that motion, Darling’s filed a motion for summary judgment. That
motion was predicated on two arguments: first, that the charge backs were prohibited by
the provisions of section 1176; and second, that section 1176-A also did not entitle Ford
to engage in that practice. Ford filed an opposition to Darling’s motion and a cross-
motion for summary judgment; the two were filed in a consolidated submission. Ford
made three arguments in connection with the summary judgment motions: first, that
section 1176-A authorized it to perform an audit of warranty charges such as those at
issue in this case; second, that the charge backs in fact were the result of audits; and third,
that in any event, due to the interplay between sections 1173 and 1176, Darling’s is not
entitled the injunctive relief it seeks under the former statute. Ford did not argue that the
provisions of section 1176, taken alone, authorized it to issue the charge backs, despite
the fact that Darling’s argued the contrary position expressly."
The court granted Ford’s motion based on the conclusion that section 1176-A
authorized Ford to issue the charge backs that Darling’s challenges. Consequently, there
was no need for the court to reach Darling’s primary liability argument, namely, that Ford
violated the provisions of section 1176. The Law Court held that this court’s
construction of section 1176-A was wrong and that the charge backs were not permitted
under section 1176-A. See Darling’s v. Ford Motor Co., 2003 ME 21, 825 A.2d 344.
The Law Court then remanded the case with instructions to enter “partial summary
judgment in favor of Darling’s relative to section 1176-A, and for further proceedings to
determine whether Darling’s is entitled to relief pursuant to section 1173.” Jd., J 13, 825
A.2d at 347-48.
From this procedural history, the court concludes here that the partial summary
judgment that the Law Court has ordered this court to issue will constitute a finding that
Ford violated the provisions of section 1176. When Darling’s moved for summary
judgment on its claim based on section 1176, the only statutory ground underlying Ford’s
objection was section 1176-A. The Law Court has now established that section 1176-A
did not authorize Ford to issue the charge backs against Darling’s. Thus, Darling’s
argument under section 1176 is left standing.
Ford argues that there was no need for it to raise any arguments in response to
Darling’s analysis of section 1176. That is true with respect to Ford’s cross-motion. If
' For example, in its memorandum that both opposed Darling’s motion and supported its
own cross-motion, Ford noted, ‘Thus, the only live question for purposes of the present
motion is whether the charge-backs in this case were done pursuant to an ‘audit’ within
the meaning of the statute.” Defendant Ford Motor Company’s Opposition to Plaintiff’ s
Motion for Summary Judgment and Cross-Motion for Summary Judgment, dated January
7, 2002, at p. 8. The context of this passage makes clear that the “audit” is the one
covered by section 1176-A, and the referent “statute” is section 1176-A. Further, for the
reasons noted in the text, the phrase “for purposes of this motion” does not overcome the
fact that Darling’s argued in its motion that section 1176 does not allow the charge backs
that Ford imposed. Thus, “the present motion” is one that directly implicated Darling’s
claim that Ford violated the provisions of section 1176.
instructions from entry of sumrnary judgment to entry of partial summary is explained by
the fact that Darling’s remedial claims remain outstanding, and further proceedings are
needed to address them. Thus, summary judgment (in the sense of a full and final
judgment) is premature.
Therefore, the entry shall be:
For the foregoing reasons, on remand, summary judgment is entered for the
plaintiff. The defendant is found to have violated the charge back provisions of 10
M.R.S.A. § 1176. On September 5, 2003, at 8:00 am, a telephonic conference of counsel
shall be held to address further proceedings relating to damages and other remedial
issues. Counsel for the plaintiff is requested to arrange the call.
4
Dated: August 29, 2003 Ml “vn /.
Justite, Mayne Superior Court
Jeffrey kh. Hjelm
Date Filed 1/23/01 Penobscot Docket No. CV-2001-14
County PEN-02~268
Action Permanent Injunction
ASSIGNED TO JUSTICE JEFFREY L. HJELM
DARLING'S d/b/a
DARLING'S FORD vs. FORD MOTOR COMPANY
Plaintiff's Attorney Defendant’s Attorney
EATON PEABODY BRADFORD & VEAGUE VERRILL & DANA
P O Box 9- 167 Park Row One Portland Square
Brunswick ME 04011 Portland ME 04112-0586
BY: Judy A.S. Metcalf, Esq. BY: Daniel L. Rosenthal, Esq.
James T. Kilbreth, Esq.
Date of
Entry
1/23/01 Complaint filed.
1/23/01 Case File Notice Postcard forwarded to Plaintiff's Counsel.
1/31/01 Officer's Return of Service on Defendant Ford Motor Co., Inc.
to William Richardson, Administrative Asst. filed. (s.d. 1/26/01)
2/15/01 Defendant Ford Motor Company's Motion to Dismiss filed.
2/16/01 Scheduling Order (MRCivP 16(a) filed. Discovery Deadline is November
1, 2001. (Hjelm, J.) Copy forwarded to attorneys of record.
3/8/01 Plaintiff's Motion to Amend Complaint and Incorporated Memorandum
filed.
3/8/01 Amended Complaint filed by Plaintiff.
3/8/01 Plaintiff's Opposition to Defendant's Motion to Dismiss filed.
Exhibits A & B attached.
3/15/01 ‘Defendant Ford Motor Company's Reply to Plaintiff's Opposition to
Motion to Dismiss filed. Exhibit 1 attached.
5/4/01 Defendant's Request for Hearing on Motion to Dismiss filed.
5/4/01 File presented to Justice Hjelm for review.
5/4/2001 File returned by the Court with instructions for the clerk to schedule
Defendant's Motion to Dismiss. (Hjelm, J.)
i
over
_ STATEOF MAINE _ SUPERIOR COURT
PENOBSCOT, SS. CIVIL ACTION
Docket No. CV-01-14 —
5 - op oe dove ’
who PES A fee oe
Darling’s d/b/a Darling’s Ford, :
FILED & ENTERED
Plaintiff ‘MAY 25 onog SU PE R10 AC QURT
02
y Order APR 2004
PENOBSCOT COUNTY
Ford Motor Co.,
Defendant
Pending before the court are Ford’s motion for reconsideration of the order after
remand dated August 29, 2003; Ford’s motion to dismiss Darling’s claim for injunctive
relief; and Darling’s motion to amend. The court has considered the parties’ written
submissions on these motions.
A. Motion for reconsideration
In the post-remand order issued in August 2003, summary judgment was entered
for Darling’s because the court concluded that Ford had not argued or preserved any
liability issue other than the one, centered on 10 M.R.S.A. § 1176-A, that the Law Court
resolved adversely to it. Ford now argues that this conclusion is erroneous and that Ford
should be allowed to litigate Darling’s claim that section 1176 did not authorize Ford to
charge back amounts that it had previously credited to Darling’s. Ford makes several
arguments in support of its request to reopen this issue.
Ford contends that in fact it advanced a substantive argument opposing Darling’s
contention, raised in its motion for summary judgment, that the charge backs violated the
terms of section 1176, aside from any consideration of the audit provisions of section
1176-A. In the August 2003 order, the court concluded that Ford had not made this
argument. With the pendency of Ford’s motion for reconsideration, the court again has
carefully reviewed the parties’ submissions on their cross motions for summary
judgment. The court remains satisfied that Ford did not meaningfully argue that the
_ charge back did not violate section 1176. As is set out in the August 2003 order,
Darling’s argued expressly that Ford’s charge backs violated section 1176 and were not
sanctioned by 1176-A. In response to that motion and in support of its own, Ford argued
that its audits were conducted in a manner authorized by section 1176-A. Darling’s
primary argument, that Ford violated section 1176 in the first place, went unaddressed in
any way that would reasonably have brought that opposition to light.
Ford also argues that the court’s earlier denial of its motion to dismiss led it to
believe that Darling’s section 1176 argument had already been resolved favorably to
Ford. This is not a fair interpretation of the court’s order. In its motion to dismiss, Ford
contended that Darling’s complaint should be dismissed because its complaint established
that the charge back resulted from an audit that was proper under section 1176-A. In
denying that motion, the court merely ruled that Darling’s complaint did not inevitably
lead to that conclusion and that the issue needed factual development. The order,
however, had no bearing or impact on the viability of Darling’s contention that the charge
backs violated section 1176 itself. Thus, this issue remained fair game.
Ford also argues that it preserved its contention that the audits were permissible
by contract. This, however, misses the point of Darling’s core argument, which it raised
pivotally in its summary judgment motion: that section 1176 precluded the charge backs
imposed by Ford. Because Ford did not address Darling’s section 1176 liability claim, it
necessarily did not challenge Darling’s argument that the statutory violation is dispositive
of the liability issue.
Finally, Ford renews its analysis of the meaning of the Law Court’s mandate and
the Court’s treatment of its motion to reconsider. This court has already considered and
addressed those arguments in the August 2003 order.
B. Motion to dismiss
Ford has moved to dismiss Darling’s claim for injunctive relief under section
1173. In support of this motion, Ford contends that injunctive relief is not available as a
remedy for a franchisor’s violation of the charge back restrictions established in section
In its motion for reconsideration, Ford argues that it did make this argument, “albeit
briefly and simply. . . .” Even the references to those arguments, however, demonstrate
that they were tied to section 1176-A and did not stand independent of the issues raised
by that latter statute and on which Ford predicated its analysis.
Io
1176. Alternatively, Ford argues that in the circumstances of this case, a violation of
section 1176 can be charged to Ford only because of its failure to properly oppose that
part of Darling’s summary judgment motion in which Darling’s argued that the charge
backs resulted in that violation.
The court treats this motion as one that is limited to the legal question of whether
Darling’s has stated a claim on which injunctive relief could be granted. In its motion,
Ford has disclaimed the alternative approach, which would amount to a fact-based
motion for summary judgment and raise the question of whether, in the specific
circumstances of this case, the record generates a factual basis that could allow injunctive
relief. See Motion of Defendant Ford Motor Company to Dismiss Claim for Injunctive
Relief at p. 8, n. 5.
“A motion to dismiss tests the legal sufficiency of the complaint.” McAfee v.
Cole, 637 A.2d 463, 465 (Me. 1994). On a motion to dismiss, the complaint must be
examined "in the light most favorable to the plaintiff to determine whether it sets forth
elements of a cause of action or alleges facts that would entitle the plaintiff to relief
o
pursuant tc some legal theory.” Id. A dismissal is proper “only when it appears beyon
doubt that a plaintiff is entitled to no relief under any set of facts that he might prove in
support of his claim.” Hall v. Board of Environmental Protection, 498 A.2d 260, 266
(Me. 1985). See also Heber v. Lucerne-in Maine Village Co., 2000 ME 137, 7, 755
A.2d 1064, 1066.
In its amended complaint, Darling’s alleged that Ford violated section 1176
because it assessed charge backs outside of the applicable time limits. On that basis,
Darling’s then requested entry of judgment under section 1173 that would include a
permanent injunction prohibiting Ford from violating section 1176 in the future. In
pertinent part, section 1173(1) provides:
Any franchisee or motor vehicle dealer who suffers financial loss of money or
property, real or personal, or who has been otherwise adversely affected as the
result of the use or employment by a franchisor of. . .any practice declared
unlawful by this chapter may bring an action for damages and equitable relief,
including injunctive relief.
(Emphasis added.) Section 1176 is located in the same statutory chapter (chapter 204) as
section 1173. Thus, the plain language of section 1173 allows an aggrieved franchisee to
seek injunctive relief for violations of section 1176. Darling’s has made this precise
claim here.
Ford argues that section 1176 includes its own remedial provisions for violations
of that statute. It also points out that at least one of those remedies (namely, attorney’s
fees) is also included in section 1173. From this, Ford argues that the remedies for a
violation of section 1176 are confined to the remedies identified in that section.
However, Ford’s construction would require a departure from the express and
comprehensive manner in which the Legislature chose to integrate the remedial terms of
section 1173 into liability claims pursued under the liability provisions of chapter 204,
which includes section 1176. Application of conventional principles of statutory
construction, see, é.g., Ashe v. Enterprise Rent-A-Car, 2003 ME 147, §.7, 838 A.2d 1157,
1159, leads to the conclusion that Darling’s is not foreclosed as a matter of law from
seeking injunctive relief.
Further, the manner in which Darling’s has secured summary judgment against
Ford is not a bar to the availability of injunctive relief.
For these reasons, the court concludes that Darling’s may pursue its claim for the
issuance of a permanent injunction. Whether the facts warrant that relief must be left to
another day.
C. Motion to amend
Finally, Darling’s has moved to amend its complaint to include claims based on
charge backs that Ford allegedly has imposed during the pendency of this case. As it
stands, Darling’s amended complaint alleges approximately $2,300 in improper charge
backs. It now seeks to further amend its complaint to allege an additional $35,000 in
improper charge backs, based on an additional series of transactions that are not
quantified in the proposed pleading.
The court denies the motion. If the motion were granted, then an entirely distinct
set of charge backs would be the subject of litigation. Despite Darling’s argument to the
contrary, principles of res judicata would not bar Ford from contesting Darling’s
allegation that these separate charge backs contravened section 1176. For that bar to
arise from either issue or claim preclusion, there must be a final judgment embodying the
basis for that bar. See In re: Kaleb D., 2001 ME 55, {7 and n. 5, 769 A.2d 179, 183.
This case has not proceeded to a final judgment, and thus the expansion of this case’s
factual parameters could fairly lead to discovery on those claims and motion practice.
The court recognizes the limited conservation of resources if additional charge
backs were now integrated into the mix, eliminating the potential need for a separate
lawsuit. However, the amendment proposed by Darling’s would return this case to the
early pretrial stages. In its present posture, the liability issues have been determined, and
the remaining question is that of damages. Under these circumstances, the court denies
Darling’s motion.
The entry shall be:
For the foregoing reasons, Ford’s motions to reconsider and to dismiss are denied.
Darling’s motion to amend is denied. Ford’s motion to strike is denied, and the court has
considered Ford’s surreply argument on Darling’s motion to amend. A conference call
shall be held with counsel and the court to determine the future course of proceedings in
this case.
Oh.
Dated: April 2, 2004 AL VA
Jeffrey L. Hjelm
Can
Date Filed
1/23/01 Penobscot Docket No. CV-2001-14
Action
intv be oan
County PEN-02-268
Permanent Injunction
ASSIGNED TO JUSTICE JEFFREY L. HJELM
DARLING'S d/b/a
DARLING'S FORD VS. FORD MOTOR COMPANY
Plaintiff’s Attorney Defendant’s Attorney
EATON PEABODY BRADFORD & VEAGUE VERRILL & DANA
P O Box 9- 167 Park Row One Portland Square
Brunswick ME 04011 Portland ME 04112-0586
BY: Judy A.S. Metcalf, Esq. BY: Daniel L. Rosenthal, Esq.
James T. Kilbreth, Esq.
Date of
Entry
1/23/01 Complaint filed.
1/23/01 Case File Notice Postcard forwarded to Plaintiff's Counsel.
1/31/01 Officer's Return of Service on Defendant Ford Motor Co., Ine.
to William RIchardson, Administrative Asst. filed. (s.d. 1/26/01)
2/15/01 Defendant Ford Motor Company's Motion to Dismiss filed.
2/16/01 Scheduling Order (MRCivP 16(a) filed. Discovery Deadline is November
1, 2001. (Hjelm, J.) Copy forwarded to attorneys of record.
3/8/01 Plaintiff's Motion to Amend Complaint and Incorporated Memorandum
filed.
3/8/01 Amended Complaint filed by Plaintiff.
3/8/01 Plaintiff's Opposition to Defendant's Motion to Dismiss filed.
Exhibits A & B attached.
3/15/01 Defendant Ford Motor Company's Reply to Plaintiff's Opposition to
Motion to Dismiss filed. Exhibit 1 attached.
5/4/01 Defendant's Request for Hearing on Motion to Dismiss filed.
5/4/01 File presented to Justice Hjelm for review.
5/4/2001 File returned by the Court with instructions for the clerk to schedule
Defendant's Motion to Dismiss. (Hjelm, J.)
i
over
STATE OF MAINE SUPERIOR COURT
PENOBSCOT, SS. CIVIL ACTION
Pocket No. CV- “Ol 14
Pe is~ lo . fia
Darling’s d/b/a Darling’s Ford,
Plaintiff
PENOBSCOT COUNTY
Vv. a ade f SAGA e Findings and Decision
Ford Motor Co., DEC 2: 2M
Defendant
On July 5 and 6, 2004, hearing was held on the limited issue of Darling’s request
for injunctive relief that would enjoin and prohibit Ford Motor Company from charging
back any payments or credits that it had issued to Darling’s on warranty reimbursement
claims. At the hearing, representatives of and counsel for both parties were present.
The often contentious history of the parties at bar is set out in various orders in
this case and, even more extensively, in court opinions issued in separate actions. That
background need not be reiterated here in detail. However; a limited rendition of some
central facts is necessary to provide context to the narrow issue now before the court.
Darling’s, a Ford dealer and franchisee, submitted to Ford several warranty
reimbursement claims for work it had performed on Ford vehicles. Pursuant to the
formulation of 10 M.R.S.A. § 1176 that was effective at the time of those claim
submissions, Ford was allowed thirty days from the date of submission to either approve
or disapprove those claims.’ If Ford approved the claims, the then-effective provisions of
section 1176 then required it to pay the claims within thirty days of the date of approval.
For the warranty reimbursement claims at issue here, Ford approved those claims within
the allowable time. However, subsequent to its decision to approve the claims, and
" Section 1176 was amended effective September 13, 2003, to allow a franchisor sixty
days to approve or disapprove a warranty reimbursement claim and then sixty days from
the date of any approval to pay the claim. See P.L. 2003, c. 356, § 10.
—
subsequent even to the expiration of the thirty day deadline to act on the claims, Ford
audited those claims and charged back the amounts that it had previously allowed.
Darling’s commenced this action, alleging that the charge backs were improper.
Ruling on the parties’ cross-motions for summary judgment, the court concluded
that section 1176-A authorized Ford both to conduct audits of warranty reimbursement
claims that it had approved previously and to charge back the dealer for claims that it
determined, based on the post-approval audit, should not have been paid. On this basis,
the court entered judgment for Ford. Darling’s appealed that decision to the Law Court.
The Court vacated the judgment, holding that the audits and charge backs allowed under
section 1176-A do not extend to warranty reimbursement claims. See Darling’s v. Ford
Motor Co., 2003 ME 21, 825 A.2d 344. For the reasons noted below, it is significant that
although the Law Court rejected the construction of section 1176-A adopted by this court,
it held that incorrect reading of section 1176-A was “not unreasonable.” Id., J 10, 825
A.2d at 347. Subsequent to the Law Court’s order of remand, for the reasons set out in
two separate orders, this court concluded that Ford had failed to counter Darling’s
predicate argument that its charge backs violated section 1176. Thus, based on a
combination of the Law Court’s recent definitive construction of section 1176-A and
Darling’s unopposed contention based on section 1176, the court entered partial summary
-- judgment for Darling’s, establishing the improper quality-of the-charge backs and. -
reserving the question of relief for hearing.
For the reasons set out in the court’s April 2, 2004, order denying Ford’s motion
to dismiss, injunctive relief is a remedy that may be available to a franchisee based on a
franchisor’s violation of section 1176. See 10 M.R.S.A. § 1173.2 The Legislature did not
identify the criteria or considerations that would bear on the question of when injunctive
relief should be granted. Thus, the court relies here on the conventional framework
applicable to such claims: whether the plaintiff will suffer irreparable injury if the
injunction is not granted; whether that irreparable injury outweighs the harm that would
befall the defendant if injunctive relief were granted; and whether the public interest
* Section 1173 also allows an award of damages, and “regardless of the amount in
controversy,” it requires an award of attorney’s fees and costs to a prevailing franchisee.
would be adversely affected if an injunction issued.’ Ingraham v. University of Maine at
Orono, 441 A.2d 691, 693. The claim for injunction relief, however, must also be
examined in light of the overarching observation adopted by the Law Court:
“Historically, the Maine courts have taken a conservative attitude toward injunctions,
holding the injunction to be an extraordinary remedy only to be granted with utmost
caution when justice urgently demands it and the remedies at law fail to meet the
requirements of the case.” HORTON MCGEEHEE, MAINE CIVIL REMEDIES, § 5.1, a pp. 5-2
to 5-3 (1991) (internal punctuation and citation omitted), quoted in Saga
Communications, Inc. v. Voornas, 2000 ME 156, J 19, 756 A.2d 954, 962.
Brought into proper focus, this is a case that examines whether Ford is statutorily
precluded from charging back against credits or payments previously approved for
warranty reimbursement claims, when those charge backs are issued outside of the time
allowed for Ford to approve or disapprove the claim in the first instance. See note 3
* The familiar formulation of the injunction analysis also requires consideration of
whether the plaintiff is likely to succeed on the merits. Ingraham, 441 A.2d at 693.
Here, the court has entered partial judgment in favor of the plaintiff, establishing that
Ford violated section 1176 when it issued charge backs on the warranty reimbursement
claims at issue in this case. The court rejects Ford’s contention that the “procedural
default” that led to the summary judgment is not a sufficient basis for the imposition of
injunctive relief. Regardless of how it is reached, a summary judgment has the effect of
an adjudication on the merits because it carries with it all of the consequences of a
judgment reached through any other means in cases where the respondent has appeared.
Ford should not be immunized from a form of relief that is otherwise available to
Darling’s simply because Ford failed to tender an argument that countered the basis for
Darling’s liability claim.
Rosen v. Harris, 427 A.2d 953 (Me. 1981) does not compel a different
conclusion. There, the Law Court vacated a permanent injunctive order because the
order would have enjoined conduct that was not the basis for the complaint. Id. at 955-
56. Here, the injunction sought by Darling’s, at least in part, would be directed toward
the conduct that it has specifically alleged is wrongful and that is central to this case.
(The court notes, however, that the conclusion of Darling’s post-trial argument articulates
a proposed order that simultaneously covers but goes beyond the factual ‘context of this
case. As Darling’s has framed the issue in its complaint, see complaint at J 11, and as the
Law Court has framed its holding, see Darling’s, 2003 ME 21, § 3, 825 A.2d at 345, this
case calls for an examination of charge backs issued by Ford following the expiration of
the initial statutory period for approving or disapproving the warranty reimbursement
claims. Thus, even if Darling’s had demonstrated that a permanent injunction were
appropriate, such relief would not extend beyond the factual context of this case and thus
would not address charge backs issued within the initial approval/disapproval period.)
supra. Despite the volume of litigation involving these parties on many other aspects on
Maine’s laws regulating the warranty reimbursement process, the issue presented here
has not been previously adjudicated in an authoritative way.* The court gives little
weight to other aspects of Ford’s procedures and decisions that Darling’s seeks to
characterize as obstructive, because the only injunction that could result from this case
would be tailored precisely to the conduct that Darling’s challenges in this case.
Therefore, evidence that Ford used other practices that Darling’s claims violated other
aspects of the warranty reimbursement laws is not particularly compelling here.
It is also important to recognize that although the Law Court has established that
section 1176-A does not authorize Ford to conduct the audits that resulted in the instant
charge backs, it was “not unreasonable” to read that statute as allowing such a practice.
Darling’s, 2003 ME 21, § 10, 825 A.2d at 347. Indeed, this court engaged in that
construction and entered judgment on that basis. Although the Law Court has rejected
that conclusion, the question had been subject to legitimate debate. Thus, the court
cannot conclude here that Ford’s election to charge back the amounts of the
reimbursement claims was indefensible.
The Law Court has ratified the notion that injunctive relief is warranted “when
justice urgently demands it. . . .” Saga Communications, 2000 ME 156, J 19, 756 A.2d at
- 962. That circumstance has not been established here. The strongest evidence
supporting the issuance of injunctive relief is Ford’s ongoing practice of charging back
against warranty reimbursement claims subsequent to the deadline for approving or
disapproving such claims, even after the Law Court issued its decision addressing the
meaning of section 1176-A, and even after this court entered a post-remand summary
judgment order holding that practice to be unlawful under section 1176.° See plaintiff’s
* The issue raised in this case had been liti gated in a small claims action and resolved
favorably to Darling’s position here. See plaintiff's exhibit 4. However, a small claims
judgment does not have preclusive effect. See 14M.R.S.A. § 7485. As far as the record
evidence reveals, neither party had sought an authoritative answer to the question at bar
prior to the initiation of this case.
° Those transactions are shown in plaintiff’s exhibit 2. As the Ford representative
explained the summary, which constitutes the first two pages of the exhibit, the “repair
date” is the date when Darling’s submitted the warranty reimbursement claim. The
4
exhibits 2, 12, and 13. Although one may argue —as Darling’s has — that this manifests a
level of defiance that can be remedied only through extraordinary relief, Darling’s is not
without the other forms of relief provided by statute. And the lack of finality in the case
at bar may be viewed as a mitigating factor that tempers the effects of Ford’s practice. At
its core, Darling’s requests an injunction that will require Ford to act in conformity with a
statute, the meaning of which has not been finally established. At the very least, such an
order is premature. When this factor is applied to the Ingraham framework, it represents
a conclusion that at this moment in the judicial process adjudicating the effects of
sections 1176 and 1176-A on the facts at issue here, Darling’s has not established that its
remedies at law are inadequate. The court concludes that the particular circumstances
underlying Darling’s claim at bar do not justify invocation of the court’s equitable
powers.
Ford has raised other arguments in opposition to Darling’s claim for a permanent
injunction. The court need not and does not reach those issues.
The parties have stipulated that the charge backs associated with the warranty
reimbursement claims underlying the complaint amount to $2,340.01. When this matter
is finally resolved in this court, judgment will be entered in favor of Darling’s in that
amount. Section 1173 also addresses awards of attorney’s fees and costs. Darling’s has
-filed-an affidavit of attorney’s fees that covers legal work performed through April 30, -
2004. See plaintiff’s exhibit 3. By December 30, 2004, Darling’s may file a new
affidavit that covers all fees and costs it seeks here. Contemporaneously, Darling’s may
submit written argument in support of its claim for fees and costs. Within fourteen days
of that filing, Ford may file a response to Darling’s submission. Within seven days of
Ford’s filing, Darling’s may file a final reply. The court will issue an order on that claim
for relief based on the parties’ written submissions.
“Aces II Register Date” is the date when Ford advised Darling’s of its intent to charge
back the amount it had previously approved. The “Parts Statement Date” is the actual
date of the charge back. Thus, in each charge back covered by plaintiff's exhibit 2, more
than thirty days elapsed between the claim date and the charge back date. Pursuant to the
partial summary judgment already entered in this case, these charge backs were wrongful.
They amount to more than $43,000.
The court concludes that Darling’s claim for attorney’s fees is integral to the relief
sought by Darling’s. Thus, for now, the court’s decisions to date on liability and
remedial claims — including the decision issued in this order -- are deemed not to
constitute a final judgment. See M.R.Civ.P. 54(b)(2). Because of the near inevitability of
an appeal, the court finds it most efficient to resolve all aspects of this case, including
claims relating to attorney’s fees, prior to the initiation of an appeal in order to allow a
unified appellate presentation and consideration of those issues.
The entry shall be:
For the foregoing reasons, Darling’s request for issuance of a permanent
injunction is denied. Further proceedings in this action will be as set out in the order.
Dated: December 12, 2004 dd {| L
Justice, Mainé Superior Court
DARLINGS - PLAINTIFF
114 SYLVAN ROAD P O BOX 569
BANGOR ME 044010569
Attorney for: DARLINGS
JUDY METCALF - RETAINED 01/23/2001
EATON PEABODY
167 PARK ROW
PO BOX 9
BRUNSWICK ME 04011-0009
VS
FORD MOTOR COMPANY - DEFENDANT
C/O C T CORPORATION SYSTEM 1 PORTLAND SQUARE
PORTLAND ME 04101
Attorney for: FORD MOTOR COMPANY
DANIEL L ROSENTHAL - RETAINED 02/15/2001
VERRILL & DANA
ONE PORTLAND SQUARE
PO BOX 586
PORTLAND ME 04112-0586
Attorney for: FORD MOTOR COMPANY
JAMES KILBRETH - RETAINED 02/15/2001
VEXRILL & DANA
OME PORTLAND SQUARE
PO BOX 586
PORTLAND ME 04112-0586
Attorney for: FORD MOTOR COMPANY
VISITING ATTORNEY - RETAINED 07/06/2004
VISITING ATTORNEY
Filing Document: ANSWER
Filing Date: 01/23/2001
Docket Events:
10/20/2003 FILING DOCUMENT - ANSWER FILED ON 01/23/2001
SUPERIOR COURT
PENOBSCOT, ss.
Docket No BANSC-CV-2001-00014
DOCKET RECORD
Minor Case Type: OTHER STATUTORY ACTIONS
NOTE - PRIOR ENTRIES IN MANUAL DOCKET ENTERED ON 01/23/2001
10/20/2003 Party(s): DARLINGS
ATTORNEY - RETAINED ENTERED ON 01/23/2001
Plaintiff's Attorney: JUDY METCALF
10/20/2003 Party(s): FORD MOTOR COMPANY
ATTORNEY - RETAINED ENTERED ON 02/15/2001
Defendant's Attorney: DANIEL L ROSENTHAL
10/20/2003 Party(s): FORD MOTOR COMPANY
ATTORNEY - RETAINED ENTERED ON 02/15/2001
Defendant's Attorney: JAMES KILBRETH
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