STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
MIKE SMITH PONTIAC GMC, INC., )
a Florida corporation, )
)
Petitioner )
)
vs. ) DOAH CASE NO. 86-0271
) MERCEDES-BENZ OF NORTH AMERICA, )
INC., a Delaware corporation, )
)
Respondent. )
)
RECOMMENDED ORDER
Pursuant to notice, a formal hearing was conducted in this case on December 2, 3, 4, and 5, 1986, at Tallahassee, Florida, before Michael M. Parrish,
a duly designated Hearing Officer of the Division of Administrative Hearings. At the hearing the parties were represented by the following counsel:
For Petitioner: John Radey, Esquire
Mark Freund, Esquire
AURELL, FONS, RADEY & HINKLE
101 North Monroe Street, Suite 1000 Tallahassee, Florida 32301
For Respondent: William J. Dunaj, Esquire
Terri Ragatz, Esquire
MERSHON, SAWYER, JOHNSTON, DUMODY & COLE
200 South Biscayne Boulevard, Suite 4500 Southeast Financial Center
Miami, Florida 33131-2387 ISSUES AND INTRODUCTION
The nature of the controversy in this case has been described as follows in the prehearing stipulation filed by the parties:
This action involves Dealer's [Petitioner's] Mercedes-Benz dealership in Daytona Beach, Florida. By certified letter dated
October 23, 1985, with a copy to the Florida Department of Highway Safety and Motor Vehicles ("Department"), MBNA [Respondent] advised Dealer of its intention to terminate the business relationship between the parties, effective January 31, 1986. Dealer initiated this action by filing a verified complaint with the Department, seeking a hearing as to whether such termination is proper under Chapter 320, Florida Statutes
and requested that MBNA be directed to reinstate and renew Dealer as a Mercedes-Benz motor vehicle dealer. Pending such determination, MBNA has continued to do business with Dealer.
The Petitioner's basic position is that none of the grounds for termination specified by the Respondent in its notice of termination are a sufficient basis for termination of its dealership. Those specified grounds, five in number, are set forth in the Respondent's termination letter of October 23, 1985. The Respondent's basic position is that any one of the five specified grounds is a proper basis for termination of the dealership.
Following the hearing a transcript of the proceedings at hearing was filed with the Division of Administrative Hearings on January 5, 1987. On January 20, 1987, the parties filed their proposed recommended orders along with memorandums in support of their respective positions. The proposed recommended orders and the supporting memorandums have been carefully considered in the preparation of this recommended order. Specific rulings on all proposed findings of fact submitted by both parties are contained in the Appendix which is attached to and incorporated into this recommended order.
Subsequent to the filing of their proposed recommended orders and supporting memorandums, both parties filed unnecessary and unauthorized motions attacking the integrity of portions of the opposing proposed recommended orders and there was, of course, the inevitable crossfire of responses and replies to those motions. Being both unnecessary and unauthorized, those post-hearing motions are not further addressed in this recommended order.
FINDINGS OF FACT
Based on the stipulations of the parties, on the exhibits received in evidence, on the deposition testimony received in evidence, and on the testimony of the witnesses at the hearing, I make the following findings of fact.
Facts Stipulated To
The Petitioner, Mike Smith Pontiac GMC, Inc., ("Dealer"), is a corporation organized and existing pursuant to the laws of the State of Florida. Dealer is engaged in the business of operating an automobile dealership with its place of business located in Daytona Beach, Florida.
The Respondent, Mercedes-Benz of North America, Inc. ("MBNA"), is a corporation organized and existing pursuant to the laws of the State of Delaware. BNA has the exclusive license in the United States, its territories and possessions, to distribute, sell, and service Mercedes-Benz passenger cars, parts, and products. MBNA's principal place of business is located in Montvale, New Jersey. In addition, MBNA has seven zone offices within the United States, each of which oversees the operations of the Mercedes-Benz dealerships located within the zone. The zone office responsible for dealership operations in Daytona Beach, Florida, is located in Jacksonville, Florida.
On or about January 1, 1984, MBNA and Dealer entered into a Mercedes- Benz Passenger Car Dealer Agreement which granted the Dealer the right to sell and service Mercedes-Benz passenger cars and parts through December 31, 1985. That agreement was extended by MBNA until January 31, 1986, by letter dated October 23, 1985.
On or about June 21, 1985, Michael Smith left the dealership and no longer functions as dealer-operator of Dealer.
Litigation between Michael Smith and Dealer and Jerome Ginsburg is presently pending in the Circuit Court in and for Volusia County, Florida, wherein Michael Smith presently claims to continue to own a 25 percent interest in Dealer.
Pending disposition of this proceeding, MBNA has continued its business relationship with Dealer to date.
Other Background Facts
MBNA is a wholly owned subsidiary of Daimler-Benz Aktiengesellschaft, a corporation of the Federal Republic of Germany, which manufacturers Mercedes- Benz passenger cars.
Dealer was formed by Jerome Ginsburg ("Ginsburg") and Michael D. Smith ("Smith") for the purpose of operating an automobile dealership named "Mike Smith Pontiac," located in Daytona Beach, Florida. Jerome Z. Ginsburg is both a lawyer and a businessman of substantial means. In late 1982, Jerome Ginsburg negotiated the purchase of an automobile dealership in Daytona Beach, Florida, from the owner, Mr. Roger Holler. At the time of purchase of the dealership, Ginsburg had absolutely no experience in the automobile field and, to this day, has never managed the day-to-day operations of an automobile dealership.
It was not Ginsburg's original intent to personally operate the dealership. Ginsburg did not consider it prudent for him to enter into the automobile business without the aid of a person experienced in that business.
The buy-sell agreement between Ginsburg and Holler required, as a condition of sale, that Holler approve the qualifications of the dealer- operator, i.e., the person who would actually be in charge of managing the day- to-day operations of the dealership. The buy-sell agreement between Ginsburg and Holler also provided that Ginsburg would lease the real property on which the dealership was situated and contained a guaranteed option to purchase that property at a value set by an agreed :AI appraiser, which option could be exercised by Ginsburg beginning one year after the dealership purchase.
Ginsburg set out to find an experienced dealer- operator to run the Daytona Beach dealership and he picked Michael D. Smith. Ginsburg was aware that the manufacturers were highly selective with respect to whom they would approve as dealer-operators. The investigative focus of MBNA differs with respect to evaluating a potential dealer-operator as opposed to a dealer-owner. MBNA looks to the financial status and ability to capitalize the dealership of the proposed owner. With respect to a proposed operator, however, MBNA seeks an individual who has proven automobile dealership management experience.
Smith submitted a resume outlining his automotive experience and employment history to Ginsburg and Ginsburg hired a detective agency to check the validity of the information submitted. The agency confirmed Smith's automobile experience. Although Smith had extensive experience in the automobile business, he did not possess any unique qualities which made him substantially different from many other dealer-operators. There are a large number of other people with similar experience.
Ginsburg, as majority shareholder and president of Dealer, assumed that Smith would operate the day-to-day business of Dealer subject to the usual controls of the board of directors and himself as chief executive officer of Dealer. There is nothing to the contrary in either of the franchise agreements between Dealer and MBNA giving the dealer-operator special independent status or legal rights vis-a-vis Dealer. Smith, like Ginsburg, was not a party to the franchise agreements.
The two principals in Dealer were Ginsburg and Smith. Ginsburg provided all of the money for the business. Ginsburg was president of Dealer and has always held at least 75 percent of the stock of Dealer. Smith operated Dealer on a day-to-day basis. In both of the franchise agreements entered into by MBNA and Dealer, Ginsburg is shown as a "Dealer Owner" and Smith is shown as both a "Dealer Owner" and a "Dealer Operator." Ginsburg loaned Smith all of the money to buy stock in Dealer and was never repaid by Smith.
A Mercedes-Benz automobile is one of the most expensive cars sold in the United States, the price to the consumer being as high as $70,000.00 for some models. Thus, MBNA's standards are higher than those of many other manufacturers, and MBNA expects its dealers to provide facilities and service commensurate with the quality and cost of the product they represent. MBNA's emphasis on service rather than sales distinguishes MBNA from most other automobile manufacturers. Because MBNA does not have a problem with sales, MBNA has a philosophy of going to the ultimate to try to satisfy its customers. It is important to MBNA that the ownership experience be as positive as is possible while the customer owns a Mercedes- Benz automobile. Thus, MBNA prefers, at a minimum, a Mercedes- Benz service reception area isolated from other car lines, with a covered area where the customer can bring his car in, be greeted, and have his order written. Moreover, MBNA expects all of its dealerships to provide a lounge wherein a customer can wait comfortably and be treated in a manner consistent with the cost of the car.
If MBNA terminates Dealer, Dealer will not be paid for the value of good will or going concern value of its business but rather would receive a liquidation value of Dealer's MBNA franchise. MBNA franchises are very valuable. If Dealer is terminated and MBNA thereafter selects another dealer, less investment will have to be made by the successor dealer and MBNA could expect to more easily obtain concessions from the new dealer. Dealer continues to operate a dual franchise by also selling Alfa Romeo and Pontiac automobiles.
Dealer does not insist on continuing to operate the MBNA franchise in Daytona even though MBNA wants to get rid of Dealer and, in fact, Dealer became contractually bound to sell to third parties unconnected to Dealer in October 1986. The third party, Mr. Cutler, agreed to pay $3.3 million for the dealership. A sale to a qualified candidate acceptable to MBNA would accomplish MBNA's sole objective in this termination proceeding by changing its representation in Daytona Beach.
At all times material to this case, Dealer was treated fairly with respect to its allocation of vehicles by MBNA. Dealer's allocation was increased while Smith was operating Dealer.
The Agreement Between Smith and Ginsburg
In Mid-February of 1983, Jerome Ginsburg and Michael Smith entered into a written agreement titled "Operating Financial Agreement." The agreement contemplated the formation of a Florida corporation for the purpose of
purchasing Lamb Pontiac, GMC, Mercedes-Benz, in Daytona Beach, Florida. The agreement also contemplated that Ginsburg would advance all of the funds necessary four the business venture and that Smith's primary role would be in the day to day on-site management of the business subject to the general supervisory control of Ginsburg. With respect to ownership of the corporation to be formed, the agreement provided in Paragraph 3:
3. That the stock of said corporation
shall be owned 75 percent by JZG [Ginsburg] and 25 percent by MDS [Smith]. The 25 percent stock owned by NDS shall be placed in escrow until the provisions of this contract are met, together
with properly executed stock transfer documents executed in blank so that said stock can be transferred to JZG or his appointee and undated but executed letters of resignation from any position as an officer or director, all in the event of a default as outlined in this Agreement.
With respect to the distribution of the profits of the corporation to be formed, the agreement between Ginsburg and Smith provided in paragraph 6:
Disregarding any modifications that may be made for tax purposes, to net income earned, said distributable income defined as prior to any salary or compensation to the parties, (less any cash requirements for the operations of the business) shall be distributed in accordance with stock ownership.
To MDS -- 25 percent, however, 50 percent of any monetary compensation in excess of One
Hundred Thousand and 00/00 ($100,000.00) shall be paid to JZG to the extent required to balance the capital and loan accounts in
the corporation to the ratio of 75 percent JZG and
25 percent MDS.
To JZG -- 75 percent.
The parties can elect to take said compensation in any form desired provided that it includes compensatory charges for any tax effect on the corporation or the other party.
With respect to Smith's basic obligations and salary under the agreement with Ginsburg, Paragraph 7 provided:
7. MDS [Smith] agrees to operate the dealership on a daily basis in accordance with the highest standards in the industry and to devote his full time to the operation of the dealership and shall not engage in any other work activity without JZG's [Ginsburg's] prior consent nor shall he invest or aid anyone else in investing or engaging in the automobile business or any
related business without JZG's prior consent. MDS shall be employed by the Corporation at a salary of $60,000 per year.
Paragraph 11 of the agreement provided:
11. In view of the large capital expenditure of JZG, MDS and his wife both agree to execute a promissory note in favor
of JZG for 25 percent of the cash required not to exceed $225,000. Said promissory note shall
be due in the event there is a default by MDS under this Agreement. The note shall be cancelled and returned upon the balancing of the capital and loan accounts as provided in Paragraph 6A. Said note shall bear interest at the rate of 10 percent per year compounded annually until paid. Said note shall be due at the end of the 54 months after purchase and unless fully paid, shall accrue interest at the highest rate allowed in the State of Florida and shall provide for waiver of presentment, dishonor and notice, the payment of full legal costs of collection, etc.
The agreement between Smith and Ginsburg also contained the following provision in Paragraph 15:
15. In the event in the future, any franchisor requires that MDS have the right to purchase or obtain a greater interest than provided herein, then in that event, MDS agrees that he will not exercise any such right. In the event a franchisor actually requires the transfer of such greater interest to MDS then in that event, compensating adjustments will be made in the ownership of the other franchises and or other assets to maintain the agreed upon ratio of ownership of assets and distribution of profits.
In addition to the foregoing, the agreement between Smith and Ginsburg contained numerous specific obligations and agreements as to the manner in which Smith would operate the business as well as a lengthy definition of what constituted a default by Smith under the agreement. Included in the definition of default by Smith was the failure of Smith to achieve specified amounts of distributable income during each of the first five years of operation of the business.
The terms contained in the agreement were drafted by Ginsburg and Ginsburg made the stock escrow arrangement a condition of Smith's ability to participate in the dealership. Ginsburg had Smith sign blank stock transfer forms and blank resignation forms in February 1983, on which the date was left blank. After Smith signed these documents, they were kept by Ginsburg in his office. Twenty-five per cent of Dealer's stock was issued to Smith, but,
immediately after Smith signed his stock certificates, Ginsburg took back Smith's stock and held it. Ginsburg and Smith never advised MBNA of the existence of this agreement.
The Application Process
After executing the foregoing agreement, Ginsburg and Smith contacted MBNA with a view toward obtaining approval of Dealer as a franchisee. MBNA requested that Ginsburg and Smith provide certain information, including business experience, financial data, and information related to stock ownership in Dealer.
As part of the pre-application process, in response to MBNA's request for background information, on April 26, 1983, Ginsburg sent to MBNA copies of applications which had been submitted to the GM Pontiac Division. Ginsburg intended that MBNA utilize the information contained in the GM Pontiac Division materials in the evaluation of Dealer's application. Ginsburg's cover letter of that date stated that the dealership would be owned by a corporation, ". .
. 75 percent of which will be owned by me and 25 percent by Michael Smith." The documents submitted to GM Pontiac Division and forwarded to MBNA with Ginsburg's letter of April 26, 1983, included a form titled "Applicant's Source Of Funds Statement." That form, filled out and signed by Smith, contains a detailed list of assets owned by Mr. Smith which he describes as being the assets which will constitute the source of his funds to acquire a 25 percent interest in the dealership. That detailed list does not include mention of any loan of money from Ginsburg. Another portion of the documents submitted to GM Pontiac Division and forwarded to MBNA requested the following information: "Would any funds you plan to invest be borrowed or be otherwise encumbered? If yes, state from whom, terms, restrictions and repayment program." Both Smith and Ginsburg answered the question, "no," and neither provided any information regarding from whom funds were to be borrowed, the conditions of the loan, or the repayment schedule.
At MBNA's initial meeting with Ginsburg and Smith, on May 27, 1983, discussions were had regarding remodeling of the dealership service facility. At that time, the dealership's Mercedes-Benz reception area was the same one used for Pontiac and there were no adequate facilities for customer waiting.
Under date of June 23, 1987, Smith and Ginsburg submitted an Application For Dealer Agreement to MBNA on behalf of Mike Smith Pontiac, GMC, Inc. The application form included a portion titled "Statement Of Finances And Ownership." That statement showed that Mike Smith Pontiac, GMC, Inc., had a maximum authorized capital stock of $1,000.00, that Ginsburg owned 75 shares for which he paid $750.00, and that Smith owned 25 shares for which he paid $250.00. In the column titled "Amount Borrowed for this Investment," both Ginsburg and Smith reported, "None."
Subsection 6 of the Statement of Finances And Ownership states: "Information is given below when it is indicated that stockholders, partner, or owner have borrowed funds to make their individual investment in this business." No information was provided regarding funds borrowed for the investment in Mike Smith Pontiac, GMC, Inc., with regard to either Smith or Ginsburg.
At the time of Dealer's original application and at all other times material to this case, MBNA had a written policy regarding absentee ownership. That policy read as follows in pertinent part:
It is our intent to avoid "absentee management" and to ensure operating control of the dealership by the resident owner/operator and, therefore, it will be the policy of MBNA that the owner/operator of the dealership shall have:
51 percent stock interest in the dealership,
or
a minimum of 20 percent ownership coupled
with the absolute right to purchase up to 51 percent of the dealership during the term of the
Dealer Agreement, evidenced by a written Agreement between the shareholders to that effect.
COMMENT
Although MBNA may, in exceptional circumstances, approve the application of a newly formed enterprise where the owner/operator has less than 51 percent of the shares because of his financial inability at
he outset to acquire 51 percent, it is the goal of MBNA to ensure that the owner/operator does acquire operating control during the term of
the dealer agreement.
Notwithstanding the foregoing written policy regarding absentee ownership, NBNA does not appear to have been very concerned about the application or enforcement of that policy. When representatives of MBNA met with Smith and Ginsburg during the application stage of the relationship, the NBNA representatives told Smith and Ginsburg about the 20 percent minimum ownership requirement with respect to dealer-operators, but did not discuss with Smith and Ginsburg the requirement of a right to purchase up to 51 percent of the stock. Further, the MBNA representative did not provide Smith and Ginsburg with a copy of the written absentee ownership policy and did not ask them to provide MBNA with a copy of a written agreement between the shareholders showing that the dealer-operator had the absolute right to purchase up to 51 percent of the dealership during the term of the dealer agreement. MBNA did not ask Ginsburg or Smith about any other agreements between those two individuals. The MBNA absentee ownership policy is not incorporated as one of the provisions of the agreement between MBNA and Dealer.
During the application process neither Ginsburg nor Smith made any mention of their written "Operating - Financial Agreement," nor did either of them show that document to any representative of MBNA. Similarly, neither Ginsburg nor Smith told MBNA that Ginsburg was holding Smith's stock certificate and signed, undated, resignation and stock transfer documents. The "Operating - Financial Agreement" was not brought to MBNA's attention because Ginsburg did not feel it was necessary to tell them about it. MBNA assumed that the information submitted by Ginsburg and Smith was true.
The First Agreement Between The Parties
The first written agreement entered into between MBNA and Dealer was an agreement titled "Mercedes-Benz Passenger Car Dealer Agreement." This agreement was filled out by representatives of MBNA and was then reviewed by
Ginsburg and Smith. Ginsburg and Smith confirmed that the statements inserted in the agreement were true. The agreement had an effective date of July 5, 1983, and remained in effect through December 31, 1984. This agreement was entered into by MBNA and Dealer as corporations. The first agreement included a section titled "Dealer Operating Requirements Agreement, also referred to as "DORA." The DORA portion of the first agreement included the following language:
Additionally Dealer agrees that the following changes and/or improvements recommended by Mercedes-Benz of North America, Inc., in the course of an analysis of Dealer's service department are necessary to the proper functioning of Dealer's service department.
Dealer agrees that it will complete the following within the period indicated:
The foregoing was followed by a typed itemization which included the following: "Provide plans for an acceptable M-B service reception area and customer lounge," which had an agreed completion date of 10-1-83, and "Complete renovation of service facility in accordance with approved plans, as mentioned above," which had an agreed completion date of 12-31-83. These same DORA commitments were also contained in the application materials reviewed and signed by Ginsburg and Smith.
In early October of 1983, Ginsburg wrote to MBNA and, among other things, sought to defer compliance with the DORA items quoted above until after the purchase of the real property on which the dealership was located, which purchase could not take place until one year after acquisition of the dealership. The condition that the property be purchased prior to completing renovations had not been mentioned by Ginsburg or Smith at the time the parties initially discussed and agreed to the DORA commitments and deadlines for completion. MBNA acquiesced in Dealer's request and agreed to extend the completion dates for the above-quoted DORA items in the DORA provisions of the next agreement.
The Second Agreement Between The Parties
Under date of January 1, 1984, MBNA and Dealer entered into a second written agreement titled Mercedes-Benz Passenger Car Dealer Agreement. Like the first agreement, this agreement was entered into by MBNA and Dealer as corporations. This is the existing and presently effective agreement. This agreement replaced the initial franchise agreement. Like the first franchise agreement between the parties, this agreement was drafted entirely by MBNA personnel without negotiation. Among the specific provisions of this existing agreement pertinent to this case are the following:
FIRST: MBNA appoints Dealer as a dealer of Mercedes-Benz Passenger Cars and as a dealer of Mercedes-Benz Parts in accordance with the provisions of this Agreement. Dealer accepts this appointment and assumes the obligation
of an authorized Mercedes-Benz dealer, as specified in this Agreement.
SECOND: Subject to the terms and conditions hereof, MBNA will sell to Dealer
and Dealer will buy from MBNA Mercedes-Benz Passenger Cars and Parts and assumes the obligation of selling and promoting the sale of Mercedes-Benz Passenger Cars and Parts and performing service, including Warranty Service, for Mercedes-Benz Passenger Cars in the following non-exclusive area: Counties of Volusia and Flagler in the State of
Florida. MBNA may alter the area described above at any time by written notice to Dealer.
THIRD: The accompanying Dealer Operating Requirements Agreement (Form No. MB-903-O) and the Dealer Agreement Standard Provisions (Form No. MB-902-F) are hereby made a part of this Dealer Agreement. Dealer acknowledges receipt of the Dealer Agreement Standard Provisions and declares that it has examined the provisions and that it is fully familiar with them.
FOURTH: This is a personal service agreement and has been entered into by MBNA in reliance upon, and in consideration of, the personal qualification and representations with respect thereto of the following named persons, hereinafter called Dealer Operators, who participate full time in the management of the Dealer and have full managerial authority and responsibility for the operations of Dealer:
Name Address Title
Michael Smith | D. | 1 River Ridge Trail, Ormond | Secretary/ Treasurer/ |
Beach, FL 32074 | General | ||
Manager |
and the following named persons, hereinafter called Dealer Owners who participate in the ownership of Dealer:
Percentage
Name Address of Ownership
Jerome Z. Ginsburg | 8 Boulder Trail, Armonk, | 75 | percent |
NY 10504 | |||
Michael D. Smith | 1 River Ridge Trail, Ormond Beach, FL 32074 | 25 | percent |
Except as may be otherwise provided in this Agreement, neither Dealer nor the persons named above shall permit any change in the
ownership or management of Dealer without the prior written approval of MBNA, which approval shall not be unreasonably withheld. No representative of MBNA has authority to give verbal approval to a change in ownership or management.
FIFTH: MBNA hereby approves the following locations for the Dealer's business pursuant to this Agreement: a salesroom at 833 Volusia Avenue, Daytona Beach, Florida; facilities for the sale of used cars with space provided for used Mercedes-Benz Passenger Cars at same and
service and parts department at same Facilities at these locations shall correspond as to style, size, layout, color, equipment, and identification by MB Signs as required by MBNA in accordance with the applicable provisions of this Agreement and with such reasonable directives and suggestions as MBNA may issue from time to time. Without the prior written consent of MBNA, Dealer shall neither change the location of its salesroom, storage facilities, service department, or used car facilities, nor establish for use in its Mercedes-Benz business, pursuant to this Agreement, any additional salesroom, storage facilities, service department, or used car facilities.
. . . .
SEVENTH: This Agreement is to be governed by, and construed according to, the laws of the State of New Jersey. It is understood, however, that it is a general form of agreement designed for use in any state; and it is therefore agreed that any provision herein contained which in any way contravenes the laws of any state or constituted authority which may apply to this Dealer Agreement shall be deemed to be deleted
here from in accordance with the applicable provision of the accompanying Dealer Agreement Standard Provisions.
. . . .
EIGHTH: This Agreement terminates and supersedes all prior written or oral agreements, if any, between MBNA and Dealer, relating to the subject matter hereof, except with respect to any trade indebtedness which may be owing by either MBNA or Dealer to the other, and except that this Agreement shall not operate to cancel any of Dealer's unfilled orders with MBNA for any Mercedes- Benz Passenger Cars, Parts, and Products placed with MBNA pursuant to the provisions
of any agreement terminated or superseded by this Agreement. Except as herein otherwise provided, the Dealer, upon execution of this Agreement and in consideration of the execution thereof by MBNA, releases MBNA from any and all claims, demands, contracts, and liabilities (including statutory liabilities) of any kind and nature whatsoever, if any, arising from or out of or in connection with any such prior agreements.
. . . .
TENTH: This Agreement shall become effective as of the day and year first above written and shall continue in effect until December 31, 1985, when it shall terminate, unless otherwise previously terminated in accordance with the applicable provisions of this Agreement.
The agreement described immediately above incorporated a document titled Dealer Operating Requirements Agreement (hereinafter "DORA"). Paragraph II,E. of the DORA provisions stated: "The minimum inventory of Mercedes-Benz vehicles in Dealer's stock will be 18 units." And as the last item under Section IV of the DORA, it is provided "In 1984/85, after purchase of real property, provide M-B identified reception area and customer lounge."
The agreement entered into between the parties also incorporated a separate document known as the "Standard Provisions," which document is a part of every Mercedes-Benz Passenger Car Dealer Agreement. Among the provisions of the Standard Provisions are the following:
Paragraph 15.D.
Dealer and MBNA agree that the following acts or events, all within the control of Dealer or originating from actions taken by Dealer or its management or owners, are so contrary to the spirit and purposes of this Dealer Agreement as to warrant its termination
. . . .
Removal, resignation, withdrawal or elimination from Dealer for any reason of any person listed in Article Fourth; provided, however, that if the person leaving is a non- owner Operator who left without notice, Dealer will be given such reasonable time as circumstances may require to replace the Operator with an Operator satisfactory to MBNA;
Any change, whether voluntary or involuntary, in the management or ownership of Dealer as set forth in Article Fourth without the prior written approval of MBNA;
. . . .
Any disagreement between or among the Dealer Operators or Owners of Dealer which in MBNA's opinion may adversely affect the
conduct of Dealer's business or the interests of MBNA, providing the disagreement continues three (3) months after notice to Dealer by MBNA that the disagreement must be resolved;
Any misrepresentation by Dealer or by any Dealer Operator or Owner in applying for this Dealer Agreement, or regarding the source of funds or capitalization of Dealer;
Submission by Dealer of false applications or claims for reimbursement, refund or credit, or of false reports of the delivery or transfer of MB Passenger Cars if such applications, claims or reports are fraudulent or part of a pattern of false applications, claims or reports;
When MBNA learns that any of the above events or acts have occurred MBNA will endeavor to discuss it with Dealer. Thereafter, MBNA may terminate this Agreement by giving Dealer written notice of such termination, to be effective upon receipt of such notice.
. . . .
Paragraph 15.E.
If MBNA determines that Dealer has failed to provide adequate facilities or to fulfill the sale and service obligations Dealer assumed under this Agreement, MBNA will advise Dealer of such failure and attempt to discuss it with Dealer. Thereafter, MBNA shall notify Dealer in writing by Certified Mail of the nature of the failure, of the acceptable remedy and of the period of time (not less than six months) during which Dealer will be expected to remedy the failure. If the failure has not been substantially remedied at the end of the period, MBNA may terminate this Agreement by giving Dealer three months written notice.
Paragraph 16.
This Agreement can be extended or renewed only through an express written instrument to that effect and only if such instrument is duly executed on behalf of MBNA by one of the persons referred to in Article Ninth of the Mercedes-Benz Dealer Agreement. Any business relations of any nature whatsoever between MBNA and Dealer after the expiration of this Agreement or after its proper termination pursuant to Paragraph 15 of this Agreement, without such written extension or renewal shall not operate as an extension or renewal of this Agreement. Nevertheless, all such business relations, so long as they are continued, shall be governed by terms identical with the provisions of this Agreement.
Concerns About Smith's Performance
During the spring of 1985; Ginsburg began to have some serious concerns about the manner in which Smith was managing the dealership. An area of primary concern was that expenses had increased significantly and the financial statements were not showing profits that should have been there. Because of these concerns, Ginsburg and Paul Richards flew to Florida for two days at the end of April of 1985. Paul Richards was an accountant who had been providing accounting services for Ginsburg and who shortly thereafter was hired full-time by Ginsburg.
During the two-day visit in April of 1985, Ginsburg and Richards met with Smith, and Richards also met with the office manager. Expenses were extremely high at that time. There appeared to be no control over expenses or cash flow. There were indications that Smith had obligated the dealership for contingent liability under recourse repurchase type obligations. The dealership had not been making money for a couple of months at that time. They discussed these problems with Smith. They tried to establish control over the dollars being spent and tried to set up a purchase order system. They established a budget for the month of May of 1985.
On May 13, 1985, Ginsburg and Richards returned to Florida to do a closer review of Dealer's books and records. During the- week of May 13, 1985, they discovered further serious problems with the operations of the dealership. During this week Ginsburg and Richards first discussed the possible removal of Smith as dealer-operator. Later in that same week Ginsburg and Richards met with Smith and discussed with him all of the problems they had discovered. Smith did not deny the problems, but asked for a chance to correct them and to continue as the dealer-operator. Ginsburg wrote a document which had the effect of modifying the "Operating - Financial Agreement," and at the end of the week of May 13, 1985, Ginsburg presented the modifying document to Smith, discussed it with Smith, and told Smith that the only way Smith could remain as the dealer-operator was to sign the modification to their previous agreement. Ginsburg also required that Smith sign a new undated resignation and a new undated stock transfer authorization. The modification document listed all of the problems that were known to Ginsburg and Richards at the time the document was prepared.
Neither Ginsburg nor Richards threatened Smith in any way in conjunction with obtaining Smith's signature on the modification document. Specifically, they did not threaten Smith with criminal prosecution. Ginsburg let Smith take the modification document home so that Smith could consider it further or consult with an attorney.
At the time Ginsburg presented Smith with the modification document, Ginsburg felt that the financial viability of Dealer was threatened and was concerned that Dealer might go bankrupt.
On May 31, 1985, Smith met with Richards and signed the modification of his agreement with Ginsburg in the presence of Richards. At the same time Ginsburg signed an undated resignation document and an undated stock transfer authorization.
Smith was not asked to sign any document whereby he specifically agreed to resign as the individual named as the dealer-operator at Paragraph Fourth of the franchise agreement between MBNA and Dealer. He has never signed such a document.
Modifications to the Ginsburg/Smith Agreement
The modification to the agreement recited, among other things, that Smith had failed to meet the minimum distributable income goals in the original agreement and set new monthly distributable income goals for the period July 1, 1985, through June 30, 1986. Specific provisions of the modified agreement in this regard read as follows:
Whereas the parties acknowledge that the goal set forth in Par. 4C(i) of minimum distributable income for the first 12 month period has not been met also the second 12 month period will not be met and
Whereas MS wants to remedy the default and JG has agreed based on the following terms and conditions
(a) The deficiency for the first 12 month period is $83,338.
The deficiency for the second 12 month period shall be determined at the end of the period by Paul Richards. Copies of his computation shall be sent to the parties.
MS agrees to prepay JG 75 percent of the total deficiency for these 2 periods. Until such repayment is completed Par 6a shall continue in effect. Par 3 is amended to
extend the escrow until such payment is made.
The parties hereby agree that in all other respects the agreement shall continue in effect except as set forth above & following.
MS has prepared a monthly profit projection for the third 12 month period a copy of which is attached hereto as Exhibit A. Said profit projection shall total $900,000 & shall be agreed to by JG.
MS agrees that failure to meet the profit projection for any one month which is not corrected by achieving the next month's profit projection plus the deficiency for the prior month shall constitute a default under this amendment and the original
agreement. . . .
Paragraph 2(d) of the modification to the prior agreement contained the following additional provisions with respect to the possibility of default:
2.(d) In the event of a default under the original agreement or this amendment by MS, he shall immediately
turn over day to day operation of the dealership to JG or his designee
cooperate in the orderly transition of
all businesses to the new management
execute any additional documents required for such transition by any franchisor i.e. GM, GMC, Pontiac, M.B., Alfa Romeo etc. or by any lendor i.e. GMAC, Barnett Bank.
In the event of a default provided MS complies with the terms set forth herein, he shall be paid his salary for 90 days after default.
The amendment to the agreement further provided in Paragraph 2(g) that Smith would submit a schedule for repayment of monies owned by Smith to the business and in Paragraph 2(h) stated: "MS acknowledges that he has willingly executed assignment and resignation papers which are to be effective upon default."
The amendment to the agreement also included an observation that in view of current problems listed further down in the amendment to the agreement, Smith's performance would be evaluated on a continuous basis for the next 120 days. That observation was followed by an itemization of fifteen problems that were described as requiring immediate and continued corrective action. Those fifteen items read as follows:
Excess new vehicle inventory
Aged new vehicle inventory
New vehicle inventory purchased in excess of cost
New vehicle inventory purchased without RDR cards
Excess inventory of used cars
Aged inventory of used cars
Used vehicles purchased or traded in at excess of value
Purchases made in excess of the cash flow ability to pay
Used vehicle purchases made in spite of already existing excess inventory
Nonmonitoring of payables, receivables & credit extensions
Excess advertising costs and non- monitoring of results
Employment of excess personnel
Payment of personnel in excess of that required and without consideration of economic return
Failure to monitor the fleet rental car lease program & dispose of vehicles on return
Failure to achieve income levels as projected
The amendment to the agreement concluded with the following language: "Repetition or continuation of these problems, failure to take corrective actions or doing any act that creates further losses shall be considered an immediate default."
The Termination of Smith's Involvement With Dealer
During the latter part of May and the first three weeks of June of 1985, the dealership continued to experience problems and Ginsburg and Richards discovered new problems. Among the new problems was discovery of the fact that Smith had entered into recourse obligations to facilitate the sale of cars. Those recourse obligations exposed Dealer to contingent liability for which there was no reserve in the dealership books and records. The recourse obligations were not reflected anywhere in the dealership's books and records. It was also discovered that Smith had failed to inform Ginsburg of another serious problem, namely, the fact that GMAC had threatened to terminate the dealership's floorplan. Termination of the floorplan would have put the dealership out of business.
By June 21, 1985, Ginsburg determined that it was no longer feasible for Smith to remain in control of Dealer's operations because of the numerous problems summarized above. On that day, Ginsburg met with Smith and told Smith that things were not working out and that Ginsburg was asking Smith to leave. Ginsburg told Smith that Smith was in default under the terms of the modifications to their "Operating - Financial Agreement" and that Ginsburg was exercising his rights under the modified agreement to date Smith's resignation and to transfer Smith's stock. Ginsburg thereafter dated Smith's resignation June 21, 1985. Ginsburg also dated Smith's stock transfer authorization June 21, 1985, and transferred all of Smith's stock to Ginsburg.
When Smith left the dealership on June 21, 1985, Ginsburg knew that Smith was disappointed, but thought that they had parted on friendly terms. When Smith left, Ginsburg expected that Smith would cooperate in an orderly transition as provided in paragraph 2.(d) of the modification to their
agreement. Ginsburg even allowed Smith to retain possession of two demonstrators (one for Smith and one for Smith's wife) for several months after June 21, 1985. It was not long before Ginsburg was disabused of any notion that he still had a friendly relationship with Smith.
Prior to the termination of Smith, Ginsburg had not advised MBNA of any of the problems at the dealership. Following Smith's termination, Ginsburg did not immediately notify MBNA of the termination. By letter dated June 26, 1985, Ginsburg advised MBNA that Smith was on vacation, that Smith had submitted his resignation, and that Dealer intended to accept. Ginsburg did not forward copies of the resignation and stock transfer authorization with the letter. Instead, Ginsburg was trying "to buy time" by not fully informing MBNA of the circumstances. Ginsburg was concerned that had he told MBNA the entire truth, they would have become concerned that there was no dealer- operator on the premises.
Ginsburg's letter of June 26, 1985, was received by MBNA on June 27, 1985. By that time MBNA had already heard through the "grapevine" that Smith had been terminated from his position as dealer-operator. On June 27, 1985, the MBNA zone manager also received a phone call from Smith and a telegram from Smith which made him aware that Ginsburg and Smith had a dispute and that Smith was still claiming to be the "dealer of record." The telegram read:
THIS IS TO PUT YOU ON NOTICE AND INFORM YOU THAT I AM STILL DEALER OF RECORD IN DAYTONA BEACH FLORIDA AND ANY AND ALL CORRESPONDENCE RECEIVED FROM JEROME Z GINSBURG OR ASSOCIATES IN REGARD TO MIKE SMITH PONTIAC INC WERE NOT
EXECUTED LEGALLY AND WERE NOT AGREED UPON BY MYSELF THEREFORE THEY ARE TO BE TOTALLY DISREGARDED
By letter dated June 28, 1985, Smith confirmed his earlier notification to MBNA. The letter included the following:
This will further confirm my mailogram to you on June 27 regarding the papers filed. I hereby put you on notice of the documents being invalid and any signatures were obtained through duress some time ago and no action should be taken on any request of
Mr. Ginsburg in relation to this dealership. He does not have the authority to act in this capacity in regard to the franchise.
When the MBNA zone manager received the conflicting communications from Ginsburg and Smith, he felt that MBNA's only option was to invoke the provisions of the franchise agreement which required the principals to resolve their differences within 90 days. By memo to the home office, he recommended invocation of that option because of the dispute as well as because of other matters mentioned in the memo.
The Warning Letter To Dealer
By letter dated July 1, 1985, MBNA followed the zone manager's recommendation and invoked paragraph l5D(g) of the franchise agreement by advising Dealer that the dispute between Ginsburg and Smith must be resolved within 90 days under pain of possible termination of the franchise agreement. The letter included the following:
It has come to our attention that a dispute is underway at your dealership among the owners of the corporation. We have received conflicting correspondence concerning the employment status of Mr. Smith and we are very concerned as to the effects this disagreement will have on the Mercedes-Benz customers in the Daytona Beach market.
This internal dispute conceriing ownership interest in your corporation is compounded by the recent events which have transpired concerning your lack of or unwillingness to conform to your Dealer Operating Requirement Agreement as well as misleading DDR reporting practices in conjunction with your leasing operation in St. Petersburg, Florida.
These various incidents along with the current serious disagreement among corporate officers is unacceptable.
At the time of sending the July 1, 1985, letter, MBNA did not know, as
between Ginsburg and Smith, which was telling the truth. MBNA also felt that it had no way of determining which of the two was telling the truth. Further, MBNA felt that it had no obligation, contractual or otherwise, to referee a dispute between Ginsburg and Smith.
Further Events Following Smith's Termination
Shortly after Smith's termination, Ginsburg sought to remedy the management vacuum resulting from Smith's departure by locating a replacement dealer-operator. To that end, in Ginsburg's letter of June 26, 1985, he asked MBNA to assist him in trying to find a new dealer-operator. MBNA did not provide any assistance in this regard. With the many financial problems facing the dealership and with MBNA threatening termination, it is difficult to find a competent dealer-operator who wants to leave a reasonable job and move into that uncertain situation.
As an interim measure, in July of 1985 Ginsburg arranged for a Mr. Lawrence Rigby, the dealer-operator of another dealership owned by Ginsburg, to temporarily fill the role of dealer-operator or general manager. Rigby is an experienced automobile dealer-operator. Since approximately July of 1985, Rigby has been spending roughly 70 to 75 per cent of his time managing Dealer. Rigby's name has never been submitted to MBNA for approval as a dealer-operator to replace Smith.
Since his telegram of June 27, 1985, and his letter of June 28, 1985, Smith has continued to contend that he still has an ownership interest in Dealer and that he still has the right to manage the day-to-day operations of Dealer. In this regard, Smith claims that he continues to be the dealer-operator of Dealer because he is so designated in the franchise agreement. Smith, through his attorneys, has put MBNA on notice of his contentions in this regard and has threatened to join MBNA in a lawsuit if MBNA takes any action inconsistent with Smith's contentions without first obtaining Smith's consent.
Smith continues to contend that he has not agreed to sell or transfer his stock in Dealer to Ginsburg or anyone else. Smith continues to contend that he has not agreed to, and that he in fact objects to, the assignment or transfer of Dealer's Mercedes-Benz franchise to anybody. Specifically, Smith contends that he has not authorized the sale of Dealer or the transfer of Dealer's franchise to Mr. Cutler. All of Smith's contentions in this regard were communicated to MBNA.
In September of 1985, Smith filed suit in circuit court against Ginsburg, Dealer, and Advantage Leasing to enforce the claims described in the preceding paragraph. After the suit was filed, an injunction was entered which allowed Smith to return to the dealership for a few days. Smith's return was disruptive to Dealer's activities, but the injunction was soon stayed by an appellate court. The appellate court ultimately determined that whatever rights Smith might have against the defendants in his lawsuit, those rights did not include the right to manage Dealer or be employed by Dealer.
As of the date of the formal hearing in this case, no final decision had been rendered in the circuit court litigation between Ginsburg and Smith, and the disputes between Smith and Ginsburg had not been resolved.
MBNA did not undertake any investigation or inquiry into the facts and circumstances surrounding Smith's departure from the dealership. MBNA did not try to find out if Smith had actually resigned (as Ginsburg claimed) or if he
had been involuntarily ejected (as Smith claimed). MBNA did not try to find out if there was any good reason for removing Smith, if in fact he had been removed involuntarily. Instead, without any investigation into what the actual facts might be, and with full awareness that under any version of the facts Ginsburg owned at least 75 percent of Dealer's stock, MBNA took the position that Smith continued to be an owner of 25 percent of the stock of Dealer and continued to be the general manager until such time as MBNA approved a change in the ownership and/or management of Dealer. MBNA persisted in this position even after it was clear to MBNA that Smith was no longer performing any management functions at Dealer after June 21, 1985. MBNA's position was based on language in the franchise agreement to the effect that there will be no changes in the ownership or management of Dealer without prior approval of MBNA. Because of the foregoing position, MBNA has also taken the position that it will not approve any changes in the management or ownership of Dealer, absent the consent of Smith.
By letter dated August 28, 1985, Ginsburg asked MBNA to accept him as Dealer's dealer-operator. With that letter he provided copies to MBNA of Smith's resignation and cancelled stock certificate, together with corporate minutes. The letter of August 28, 1985, stated, inter alia, that Ginsburg had become a Florida resident and intended to become the dealer-operator of Dealer. This statement was not true because Ginsburg was not and never became a Florida resident. Moreover, Ginsburg is the chief executive officer and a substantial investor in several other businesses which have offices in New York, Ohio, South Carolina, and Texas. It is most unlikely that Ginsburg would ever devote full- time attention to the management of Dealer to the exclusion of his several other business ventures. Ginsburg's letter of August 28, 1985, did not provide MBNA with any information regarding his experience in the automotive field. Ginsburg has never been the day-to-day operator of an automobile dealership.
Upon consideration of Ginsburg's letter of August 28, 1985, MBNA was of the opinion that Ginsburg had neither the experience nor the time to manage the day-to-day operations of Dealer. Accordingly, MBNA responded to Ginsburg's letter of application with a summary denial in a letter dated September 10, 1985. This summary rejection was repeated in the termination letter of October 23, 1985.
MBNA has no written criteria to determine whether a candidate for dealer-operator is satisfactory. Individual discretion is exercised with judgmental factors in lieu of written criteria.
Ginsburg has continued to look for a permanent replacement for Smith, but has been unable to find anyone acceptable to himself. Other than Ginsburg's proposal of himself as dealer-operator, no dealer-operator candidate has been submitted to MBNA for approval since the departure of Smith.
Since June of 1985, MBNA has continued to provide cars to Dealer and to treat Dealer in an ordinary fashion despite the departure of Smith.
The Termination Letter
By letter dated October 23, 1985, MBNA advised Dealer that it intended to terminate Dealer's Mercedes-Benz Passenger Car Dealer Agreement on January 31, 1986, a date more than 90 days from the date of the letter. The letter of October 23, 1985, also stated:
The Mercedes-Benz Dealer Agreement expires on
December 31, 1985. In order to provide sufficient notice to effect the termination of the Agreement, we will extend the Dealer Agreement until January 31, 1986. This notice and extension is pursuant to the provisions of Paragraphs 15 and 16 of the Mercedes-Benz Passenger Car Dealer Agreement.
The termination letter of October 23, 1985, stated that there had been "numerous deficiencies" and "material breaches" of the Mercedes-Benz Passenger Car Dealer Agreement dated January 1, 1984. The specified deficiencies and breaches were described as follows in the termination letter:
Your corporation has reported on past occasions what appears to be inaccurate sales reports, referred to as DDR cards. This was done apparently for the purpose of gaining an unfair advantage by abusing the allocation system by which Mercedes-Benz vehicles are distributed in the United States. Improper reporting on sales documents impairs our ability to have the proper customer information available for the administration of the warranty and, in the event of a recall, does not enable us to forward proper documentation to the ultimate user of the vehicle.
Under section IV, titled Service Department, of the Dealer Operating Requirement Agreement, (DORA), executed as part of the Dealer Agreement, your corporation agreed and committed: "in 1984/85, after purchase of real property, (to) provide Mercedes-Benz identified reception area and customer lounge". This commitment has not been met.
In addition, your corporation has attempted to make a change in management by the attempted dismissal of the Dealer Operator, Mr. Michael D. Smith as General Manager. This is in direct viola- tion of Paragraph FOURTH of the Mercedes-Benz Dealer Agreement which states "...neither dealer nor the persons named above shall permit any change in the ownership or management of dealer without the prior written approval of Mercedes-
Benz of North America..." This has resulted in a situation where the dealership has been functioning without any approved management.
As we stated previously in our letter of September 10, 1985, we are not willing to approve
Mr. Jerome Z. Ginsburg as a dealer operator as he appears to be a New York based attorney and is not experienced in the management of a dealership. Mr. Ginsburg was never approved as a Dealer Operator and his name is listed under Paragraph FOURTH of the Mercedes-Benz Dealer Agreement solely as a dealer owner who participates in the ownership of the dealer.
This non-approved change in management has resulted in a management dispute. We advised you in our corporate communication of July 1, 1985 that we were invoking the provisions of Paragraph 15D(g) of the Mercedes-Benz Passenger Car Dealer Agreement thereby giving you
90 days to resolve this internal management dispute. This dispute is anything but resolved as demonstrated by the Transcript of Proceedings of Mike D. Smith, Plaintiff vs. Mike Smith Pontiac, GMC, Inc., a Florida Corporation; Advantage Leasing and Rental Corporation, a Florida Corporation; and Jerome Z. Ginsburg, Defendants in the Circuit Court Seventh Judicial Circuit of Florida in and
for Volusia County, Case : 85-3034- CA-01, Division F, as well by Mr.
Smith's recent appearance at the dealership and the attempted arrest of him by other parties at the dealership.
It has also come to our attention that in review of the aforementioned Transcript that Mr. Ginsburg and Mr. Smith misrepre- sented the ownership interest each was required to have as a condition precedent to the execution of the
Dealer Agreement. In addition to the foregoing material breach alluded to in
Paragraph 3 of this letter, this
misrepresentation as to the owner- ship of the corporation also constitutes a material breach of the Dealer Agreement, thus justi- fying the termination of that
Agreement and relationship between us.
We believe that we have given your corporation sufficient time to remedy the many problems which have occurred at your dealership. As Mr. Korman, our Dealer Organization Manager, indicated to one of your attorneys, Mr. Crocker, our previous corporate communications were designed to indicate to you the seriousness of the situation at your dealership and the need to take the appropriate timely actions to remedy them.
You have not done so.
Inaccurate Sales Reports (DDR cards)
All of MBNA's dealers are required to fill out a DDR card, or sales report, for each Mercedes-Benz car sold. It is not infrequent that DDR cards have mistakes on them.
Accurate reporting of sales by way of DDR cards is very important to MBNA. The purpose of having cards completed accurately is threefold: (1) to determine the starting date of the retail customer's vehicle warranty, (2) to advise MBNA of the address and name of the purchaser or lessee in the event of a vehicle recall, and (3) to determine the dealer's future allocation of vehicles. With regard to the last of these three purposes, Mercedes-Benz vehicles are in great demand and they are usually easily sold by Mercedes-Benz dealers. Generally, demand exceeds supply and dealers want more cars than are allocated to them. Each dealer's allocation is derived by way of a mathematical formula based on his actual sales as a percentage of the zone's sales.
No inaccurate sales reports by Dealer (referred to as "DDR cards") have been discovered by MBNA to have existed prior to January of 1985.
Because of the importance of the DDR policy, Dealer was provided with a copy of that policy at the inception of the relationship, and was provided additional copies thereafter. Representatives of MBNA also explained the DDR policy to Dealer on several occasions. The explanations were not always the same.
The totality of the DDR card problem at Dealer up to the time of the termination letter consists of one incident in February of 1985 involving six cars that were sold to Advantage Leasing, a leasing company owned by Smith and Ginsburg. The Dealer reported (via DDR cards) a sale of six Mercedes-Benz cars to the leasing company before the cars were removed from Dealer's premises. Those DDR cards did not contain the names of the ultimate lessees. When representatives of MBNA communicated with Dealer about the February 1985 incident and provided Dealer with a copy of the DDR policy, Dealer indicated that it would comply with the policy. Dealer's explanation for part of the February 1985 DDR problem was that the removal of the cars was unexpectedly
delayed by a truck breakdown. Ultimately MBNA's representative McDonough was satisfied with Dealer's response to MBNA's communications regarding the February 1985 DDR card incident.
MBNA suffered no prejudice as a result of the DDR card problem in February 1985 and Dealer did not receive any advantage in the MBNA allocation system as a result of that problem. Specifically, Dealer did not receive any accelerated DDR credit due to reporting the cars sold at an early date.
The DDR policy appears to be ambiguous in some respects and is certainly complex. MBNA has not previously terminated a dealer for making mistakes on DDR cards.
The first stated ground for termination in MBNA's October 23, 1985, termination letter in essence accuses Dealer of intentionally submitting inaccurate DDR cards for an improper purpose. However, MBNA did not conduct any investigation into Dealer's motives in this regard and there is no evidence in this case that Dealer had any improper motive or purpose when it submitted inaccurate DDR cards in February of 1985.
The Reception Area And Customer Lounge
The Dealer Operating Requirements Agreement, or DORA, is a part of the franchise agreement. The purpose of the DORA is to apply MBNA expertise to individual local circumstances. The DORA is drafted by MBNA according to what MBNA thinks is necessary in order for the dealership to operate efficiently and effectively.
When Dealer applied for the franchise in 1983, MBNA filled in the application form for Dealer and included non- negotiated provisions related to a customer lounge and a reception area. The provisions in the MBNA application then were put into the initial franchise agreement of MBNA and Dealer.
On November 1, 1983, Mr. McDonough became Jacksonville zone manager for MBNA with authority over Dealer, and he determined at that time there were unfulfilled "service requirements" for Dealer. In 1983, Dealer provided a separate customer reception area for Mercedes customers and renovated an existing customer lounge.
Dealer's DORA commitment in the existing franchise agreement regarding the reception area and lounge has as a condition precedent ". . . after purchase of real property. . . ." The real property referred to is the property on which the dealership is located. At the time of purchasing the dealership, Mr. Ginsburg also received an option to purchase the dealership premises. The earliest date on which the option could be exercised was one year after the purchase of the dealership. Mr. Ginsburg exercised the option to purchase the property, but the sale has never taken place because Ginsburg and the property owner became embroiled in a dispute about the appraised value of the property, which value determines the purchase price. That dispute resulted in litigation which is still pending. Accordingly, there having been no purchase of the real property, the condition precedent has not occurred. Further, as of the date of the termination letter, the time limit for these commitments ("1984/85") had not expired.
Paragraph l5E of the Standard Provisions in the franchise agreement requires that MBNA give a dealer certain notice prior to initiating a termination based on inadequate facilities. No such notice was given by MBNA to Dealer regarding the reception area and customer lounge.
MBNA does not terminate a dealer every time a DORA commitment is not met but rather exercises judgment. Where termination involves a DORA provision, then the dealership agreement procedure is followed.
The zone manager, Mr. McDonough, was not aware of any complaints regarding Dealer's customer lounge. MBNA did not perform its own study as to whether or how long customers waited at Dealer. However, a scientific study was commissioned by MBNA. That study contains no indication of dissatisfaction with Dealer's service facilities. Instead, it shows that persons purchasing cars from Dealer returned for service or went elsewhere because of the distance to Dealer. Ginsburg was not made aware that the customer lounge represented any major problem with respect to MBNA.
Nothwithstanding the assertions in the second stated ground for termination, Dealer's failure to comply with the DORA provisions regarding the reception area and customer lounge was not one of the reasons for the proposed termination. MBNA's real concern in this regard was much broader; it was MBNA's perception that throughout the entire period of the relationship between the parties, Dealer had failed to act in a manner consistent with the "M-B Service Concept." This broader concern was not stated in the termination letter.
Throughout the greater part of the relationship between the parties from its inception until the termination letter of October 23, 1985, there seems to have been a continuing concern on the part of MBNA with respect to Dealer's failure to perform in a manner consistent with the "M-B Service Concept. Although the record in this case suggests that the "M-B Service Concept" may be set forth in some document, that document does not appear among the many exhibits offered in this case and the most that can be said about what constitutes the "M-B Service Concept" is that there appears to be some sort of article of faith amongst the functionaries of MBNA to the effect that because Mercedes-Benz cars are such expensive and high quality cars, the entire ownership experience should be a high quality experience, i.e., that Mercedes- Benz car owners are entitled to more than the owners of lesser cars. Aspects of this article of faith include concerns about such matters as the size and quality of the facilities, the staffing of the facilities, and the attitude of those operating the facilities. MBNA seems to have been disappointed with anything less than what might be described as a "gung-ho" commitment to the "M-B Service Concept" and appears to have expected Dealer to take an enthusiastic attitude toward making all sorts of changes in its facilities and operations even at times when MBNA seemed to be having difficulty providing Dealer with enough Mercedes-Benz automobiles to sell. Numerous Dealer Contact Reports show that the Dealer had an inadequate inventory of Mercedes-Benz cars even though Dealer seems to have rather constantly sought to receive more cars than MBNA was able or willing to provide.
The location from which Dealer was doing business seems to have been ill suited to the operation of a Mercedes-Benz dealership in conjunction with other lines of cars, because not only was MBNA dissatisfied with Dealer's efforts at implementing the "M-B Service Concept" at that location, but MBNA had been similarly dissatisfied with several previous Mercedes-Benz dealers who had attempted to do business at that same location. MBNA's frustration with Dealer's failure to live up to their ill- defined "M-B Service Concept" should
not have come as any real surprise, because MBNA seems to have been similarly frustrated in its efforts to have two or three previous dealers implement the "M-B Service Concept" at that same location.
CONCLUSIONS OF LAW
On the basis of all of the foregoing findings of fact and on the applicable legal principles, I make the following conclusions of law.
The Division of Administrative Hearings has jurisdiction over the subject matter of and the parties to this case. Sec. 120.57, Fla. Stat.
The basic statutory provision from which this case arises is Section 320.641, Florida Statutes, which reads as follows, in pertinent part:
Unfair cancellation of franchise agreements.--
(1)(a) An applicant or licensee shall give written notice to the motor vehicle dealer and the department of the licensee's intention to discontinue, cancel, or fail to renew a franchise agreement or of the licensee's intention to modify a franchise or replace a franchise with a succeeding franchise, which modification or replacement will adversely alter the rights or obligations of a motor vehicle dealer under an existing franchise agreement or will substantially impair the sales, service obligations, or investment of the motor vehicle dealer, at least 90 days before the effective date thereof, together with the specific grounds for such action.
(b) The failure by the licensee to comply with the 90-day notice period and procedure prescribed herein shall render voidable, at the option of the motor vehicle dealer, any discontinuation, cancellation, nonrenewal, modification, or replacement of any franchise agreement. . .
Franchise agreements are deemed to be continuing unless the applicant or licensee has notified the department of the discontinuation of, cancellation of, failure to renew, modification of, or replacement of the agreement of any of its motor vehicle dealers; and annual renewal of the license provided for under ss. 320.60-320.70 is not necessary for any cause of action against the licensee.
Any motor vehicle dealer whose franchise agreement is discontinued canceled, not renewed, modified, or replaced may, within the 90-day notice period, file with the department a verified complaint for a determination of whether such action is an unfair or prohibited discontinuation,
cancellation, nonrenewal, modification, or replacement. Agreements and certificates of appointment shall continue in effect until final determination by the department of the issues raised in such complaint by the motor vehicle dealer, and except pursuant to
s. 320.643, no replacement motor vehicle dealer shall be named for this point or location to engage in business prior to the final adjudication by the department on the complaint.
. . . .
(5) If the complainant motor vehicle dealer prevails, he shall have a cause of action against the licensee for reasonable attorneys' fees and costs incurred by him in such proceeding, and he shall have a cause of action under s. 320.697. (emphasis added)
Consideration must also be given to the language of Section 320.643(2)(a) and (b), Florida Statutes, which provides:
(2)(a) Notwithstanding the terms of any franchise agreement, a licensee shall not, by contract, or otherwise, fail or refuse to give effect to, prevent, prohibit, or penalize, or attempt to refuse to give effect to, prevent, prohibit, or penalize, any motor vehicle dealer or any proprietor, partner, stockholder, owner, or other person who holds or otherwise owns an interest therein from selling, assigning, transferring, alienating, or otherwise disposing of, in whole or in part, the equity interest of any of them in such motor vehicle dealer to any other person or persons, including a corporation established or existing for the purpose of owning or holding the stock or ownership interests of other entities, unless the licensee proves at a hearing pursuant to this section that such sale, transfer, alienation, or other disposition is to a person who is not, or whose controlling executive management is not, of good moral character.
A motor vehicle dealer, or any proprietor, partner, stockholder, owner, or other person who holds or otherwise owns an interest in the motor vehicle dealer, who desires to sell, assign, transfer, alienate, or otherwise dispose of any interest in such motor vehicle dealer shall notify, or cause the proposed transferee to so notify, the licensee, in writing, of the identity and address of the proposed transferee. A licensee who receives such notice may, within
60 days following such receipt, file with the department a verified complaint for a
determination that the proposed transferee is not a person qualified to be a transferee under this section. The licensee has the burden of proof with respect to all issues raised by such verified complaint. The department shall determine, and enter an order providing, that the proposed transferee either is qualified or is not and cannot be qualified for specified reasons; or the order may provide the conditions under which a proposed transferee would be qualified. If the licensee fails to file such verified complaint within such 60-day period or if the department, after a hearing, dismisses the complaint or renders a decision other than one disqualifying the proposed transferee, the franchise agreement between the motor vehicle dealer and the licensee shall be deemed amended in accordance with the determination and order rendered, effective upon compliance by the proposed transferee with any conditions set forth in the determination or order.
(b) During the pendency of any such hearing, the franchise agreement of the motor vehicle dealer shall continue in effect in accordance with its terms. The department shall expedite any determination requested under this section.
The related provisions of Section 320.644, Florida Statutes, also require attention. They read as follows:
Change of executive nanagement control; objection by licensee; procedure.--
No licensee shall prohibit or prevent, or attempt to prohibit or prevent, any motor vehicle dealer from changing the executive management control of the motor vehicle dealer unless the licensee, who has the burden of proof, proves at a hearing as
provided herein that such change of executive management control of the motor vehicle dealer is to a person or persons not of good moral character or who do not meet the written, reasonable, and uniformly applied standards of the licensee relating to the business experience of executive management required by the licensee of its motor vehicle dealers. A motor vehicle dealer who desires to change its executive management control shall notify the licensee by written notice, setting forth the name, address, and business experience of the proposed executive management. A licensee who receives such notice may, within 60 days following such receipt, file with the department a verified
complaint for a determination that the proposed change of executive management will result in executive management control by persons who are not of good moral character or who do not meet such licensee's standards. The licensee has the burden of proof with respect to all issues raised by such verified complaint. If the licensee fails to file such verified complaint within such 60-day period or if the department, after a hearing, dismisses the complaint, the franchise agreement between the motor vehicle dealer and the licensee shall be deemed amended in accordance with the decision rendered.
During the pendency of any such hearing, the franchise agreement of the motor vehicle dealer shall continue in effect in accordance with its terms. The department shall expedite any determination requested under this section.
And to help put all of the foregoing statutory provisions into context, they must be read together with Section 320.701, Florida Statutes, which states:
Applicability of ch. 84-69, Laws of Florida.--
This act applies to all presently existing or established systems of distribution of motor vehicles in this state, except to the extent that such application would impair contractual agreements in violation of the Florida Constitution or Federal Constitution. All agreements renewed or entered into subsequent to May 31, 1984, will be governed by this act.
The Respondent has argued that it would be unconstitutional to apply some of the foregoing statutory provisions to the disposition of this case.
This argument is predicated on the contention that it would be an unconstitutional interference with the Respondent's right to contract if it were to have applied to its contract provisions of law which did not take effect until after the commencement of the contract. It is well-settled law that neither the Hearing Officers of the Division of Administrative Hearings nor the heads of administrative agencies have the authority to hold statutes unconstitutional, either on their face or as applied. The legislature has clearly expressed its intent in Section 320.701, Florida Statutes. The 1984 amendments to Chapter 320, Florida Statutes, which amendments include Section 320.643(2)(a) and (b) and Section 320.644, were intended to apply to all existing or established systems of distribution of motor vehicles in this state.
. . ." The sole exception is where such application would impair contractual agreements in violation of the state or federal constitutions. Whether the dealership agreement between the parties in this case comes within the exception is a matter which can only be resolved by the courts, because it is a matter which turns on the constitutionality of the 1984 statutory amendments as applied
to the dealership agreement. Determinations of the constitutionality of statutes being beyond the powers of either the Hearing Officer or the Department of Motor Vehicles and Highway Safety, all of the existing statutes must be applied as written.
Yet another reason for reaching the same conclusion regarding the applicability of the 1984 statutory amendments is that at the same time that MBNA issued its termination letter of October 23, 1985, MBNA also extended the effective date of the existing agreement by 31 days in order to be in compliance with the statutory 90-day notice period. MBNA's act of extending the duration of the agreement would appear to bring the agreement within the meaning of the last sentence of Section 320.701, Florida Statutes, which states: "All agreements renewed or entered into subsequent to May 31, 1984, will be governed by this act." In this regard it is important to note that absent the extension of the duration of the agreement, MBNA would have been statutorily obligated to enter into a successor agreement with Dealer on January 1, 1986, and that successor agreement would clearly have been subject to the 1954 statutory amendments.
The Nature Of The Burden Of Proof
The allocation of the burden of proof in this type of case was discussed in International Harvester Comtany v. Calvin, 353 So.2d 144 (Fla. 1st DCA 1978). There, at page 148, the court explained:
We must therefore attempt to determine from the evidence the motives leading to
International's [the manufacturer's] decision to cancel.
We are again faced, as in Pasco County
School Board v. PERC, 353 So.2d 108 (Fla. 1st DCA 1977), and Columbia County Board of Public Instruction, 353 So.2d 127 (Fla. 1st DCA 1977), with the difficult problem of determining the subjective intent of a party. As in Pasco County, we adopt the United States Supreme Court's reasoning in Mt.
Healthy City Board of Education v. Doyle, 429 U.S. 274, 97 S.Ct. 568, 50 L.Ed.2d 471
(1977), as the proper test for determining such intent.
Contrary to the argument in the Director's brief, it is Rich Motors [the dealer] which has the initial burden of proof to show by a preponderance of the evidence the unfairness of International's decision to terminate the franchise agreement. The burden, following a prima facie showing of bad faith, shifts to International Harvester to show by a preponderance of the evidence it would have reached the same decision even in the absence of the alleged bad faith. Mt. Healthy, supra, at 286, 97 S.Ct. 568.
The foregoing method of analyzing the evidence is perhaps easier said than done. In the final analysis, the determination of the manufacturer's true motivation for termination of a dealership must be based on an evaluation of the totality of the evidence, as illustrated by the following language from the International Harvester case, supra:
It is questionable whether Rich Motors, by its bald assertion International Harvester desired termination of the dealership after Rich had protested the neighboring Delray Beach dealership, has made a prima facie showing of unfairness. Nevertheless we find the objective data introduced by International Harvester, and substantially uncontradicted by Rich Motors, is so overwhelming as to establish an independent reason for termination of the contract.
By way of further clarification of the immediately foregoing language, the court in International Harvester, supra, added the following footnote:
As stated above, we adopt the reasoning in Mt. Healthy when considering a public employer's alleged bad faith leading to the decision not to renew certain school teachers' contracts in Pasco County. This is perhaps not as sensitive an area as public labor relations. There is here not the aura of First Amendment and Florida constitutional rights of speech and association as in labor relations cases. Nor are the parties here in the necessarily adversary relationship of unions and employers. The aims of the manufacturer and dealer are basically the same to make a profit. It makes less sense to attribute a bad motive to a manufacturer when the relationship with the dealer is so obviously symbiotic.
The purpose and scope of Sec. 320.641, F.S.
Section 320.641, Florida Statues, provides a mechanism for a dealer to obtain a determination of whether certain action by the manufacturer is "unfair, or "prohibited." Neither of the quoted terms is defined in the statute. It is well settled in Florida that "[w]ords of common usage, when used in a statute, should be construed in their plain and ordinary signification and not in a technical sense. . . ." Gasson v. Gay, 49 So.2d 525 (Fla. 1950). See, also, Gaulden v. Kirk, 47 So.2d 567 (Fla. 1950), to the effect that words in a statute should be given "the meaning accorded them in common usage," and Harper v. State, 217 So.2d 591 (Fla. 4th DCA 1969) , holding that a word should be given "its plain and obvious meaning." The best source of the plain, obvious, ordinary, or common meaning of a word is usually a reliable dictionary. At page 2494 of Webster's Third New International Dictionary, Unabridged (1976 edition), the definition of the word "unfair" includes the following:
not fair: a: marked by injustice, partiality,
or deception: unjust, dishonest . . . providing an insufficient or inequitable basis for judgment or evaluation: not representative . . . c: not according with
merit or importance . . . f. not equitable in business dealings (as in competition, wage scales, or attitude toward a labor union). . . .
And inasmuch as the prefix "un," when used to form an adjective, generally means "not," or otherwise indicates the negative of the adjective to which it is affixed, it is helpful to an understanding of the word "unfair" to consider the meaning of its opposite, "fair." At page 815 of the same edition of Webster's the following is included regarding the meaning of the word "fair:"
7.a: characterized by honesty and justice:
free from fraud, injustice, prejudice, or favoritism . . . b. (1): conforming to an established commonly accepted code or rules
of a game or other competitive activity . .
equitable as basis for exchange:
reasonable . . . (4): conforming to its merits or importance . . . (5) having a certain basis in evidence or of reason:
justified, valid . . . (6): being a sufficient, equitable, or adequate basis for judgment or evaluation . . . syn Fair, just, equitable, impartial, unbiased, dispas- sionate, uncolored, and objective can apply, in common, to judgments, judges, or acts resulting from judgments, and signify freedom from improper influence. Fair, the most general of the terms, implies a disposition
in a person or group to achieve a fitting and right balance of claims or considerations that is free from undue favoritism even to oneself, or implies a quality or result in an action befitting such a disposition. . . .
Finally, at page 1813 of the same edition of Webster's the definition of the word "prohibit" includes the following:
1: to forbid by authority or command: enjoin, interdict . . . 2a: to prevent from doing or accomplishing something: effectively
stop . . . b: to make impossible. . .
The foregoing definition of "prohibit" clearly encompasses actions which are prohibited by statute. Thus, a proposed termination which was based on a ground which was statutorily declared to be an impermissible ground for termination would clearly be a "prohibited" termination within the meaning of Section 320.641(3), Florida Statutes. But the unmodified and unqualified word "prohibited" is also susceptible of an interpretation that would encompass contractual prohibitions. Accordingly, to the extent any language in the dealership agreement has the effect of prohibiting termination for a specified
reason or prohibiting termination other than in a specified manner, any proposed termination which was at odds with those contractual provisions would also appear to be a "prohibited" termination within the meaning of Section 320.641(3), Florida Statutes.
When seeking to ascertain the meaning of a statutory provision, it is often helpful to consider the legislative purpose for which the statute was enacted. Some insight into the purpose and scope of Section 320.641, Florida Statutes, may be gleaned from the following passage at pages 147-148 of International Harvester, supra:
In permitting such review, it is obvious the legislative intent was to redress the economic imbalance which customarily exists between national manufacturers and local dealers. A second reason for agency review is to protect dealerships from arbitrary and
discriminatory action when manufacturers seek to impose the franchise agreement's broad requirements upon dealers as a pretext to terminate. Another reason, as alleged here by Rich, is when the manufacturer coerces a dealer to buy more inventory or make more expenditures it would not make but for fear of termination of its franchise. It is not, however, coercion for the manufacturer to attempt to enforce the valid contractual
obligations of another party. (emphasis added)
And under at least some circumstances it would appear not to be unfair or prohibited for a manufacturer to take action to protect the integrity of its trade name. As recognized by the Florida Supreme Court in Yamaha Parts Distributors, Inc. v. Ehrman, 316 So.2d 557 (Fla. 1975): "The right of a manufacturer to maintain the integrity of his trade name in the market place is a valuable right which a disreputable franchise can quickly destroy."
It has been argued that further insight into the interpretation of the Florida statute can be gleaned from a consideration of the similar federal statutory provisions known as the Dealer's Day in Court Act, which provides a civil cause of action for dealers damaged by reason of the failure of an automobile manufacturer "to act in good faith in . . . terminating, canceling, or not renewing the franchise with said dealer." 15 U.S.C. Sec. 1222. In the federal statutory scheme, the term "good faith," is defined at 15
U.S.C. Sec. 1221 as follows:
[T]he duty of each party to any franchise, and all officers, employees, or agents thereof to act in a fair and equitable manner toward each other so as to guarantee the one party freedom from coercion, intimidation, or threats of coercion or intimidation from the other party: Provided, That recommendation, endorsement, exposition, persuasion, urging or argument shall not be deemed to constitute a lack of good faith.
Notwithstanding the facial similarity of the concept of acting in good faith to the concept of acting in a manner that is not unfair, careful examination of the court decisions under the federal act reveals that the federal court decisions provide little of assistance in the interpretation of the Florida statutory provisions. This is because the federal courts have given to the term "good faith," as used in the Dealer's Day in Court Act, a meaning much more narrow and restrictive than the ordinary meaning of that term. A number of the federal court decisions have noted that the federal legislation gives a "specialized definition" to the term "good faith." Among those decisions is Overseas Motors, Inc. v. Import Motors Limited, Inc. 519 F.2d 119 (5th Cir. 1975), cert. den. 96 S.Ct. 395 (1975), in which the court stated, at page 125:
The cases have uniformly held that evidence of coercion or intimidation is necessary to a showing of lack of good faith under the statute, and a mere showing of arbitrary or other bad faith conduct absent coercion is not a sufficient ground for recovery under
the Act. . . . Evidence of coercive conduct is an essential element of any cause of
action under the Act.
The narrow scope of the federal act is also discussed at length in Quarles v. General Motors Corporation, 597 F.Supp. 1037 (W.D.N.Y. 1984), which includes the following:
As "Congress' initial effort at regulation of the relationships between automobile manufacturers and their dealers," the DDCA admittedly falls far short of providing a basis for relief in every case of unfair conduct, including many cases which "might well call for remedial action." McDaniel v. General Motors Corp., 480 F.Supp.666,677 (E.D.N.Y.), affd. 628 F.2d 1345 (2nd Cir. 1980)
. . . .
To demonstrate an absence of "good faith" within the meaning of the DDCA, therefore, it will not suffice to show that a dealership's termination was arbitrary, or even unfair.
It must be shown that defendant coerced or intimidated plaintiff, and that the coercion was designed to achieve some objective which was improper or wrongful.
. . . .
Where there is no evidence of such wrongful coercion or intimidation by defendant, as those terms have been narrowly construed, there can be no recovery under the DDCA, "even if the manufacturer otherwise acted in
`bad faith' as that term is normally used."
And in McDaniel v. General Motors Corp., 480 F.Supp. 666,676 (E.D.N.Y), affd. 628 F.2d 1345 (2nd Cir. 1980), the court said:
Failure to act in good faith sufficient to
bring the [DDCA's] proscriptions into play is a limited concept, however, and is found only where there is evidence of a wrongful demand enforced by threats of coercion or intimidation. Without proof of lack of good faith within the meaning of the Act there can be no relief under the [DDCA], even for arbitrary decisions with respect to termination of a dealership.
Thus, the "specialized definition" of the term "good faith," as interpreted by the federal courts, is not particularly helpful in determining how the Florida statute should be applied.
It has also been argued that in view of certain language in the dealership agreement the law of New Jersey should be applied in the determination of the parties' rights under the dealership agreement. For several reasons, it is concluded that this case must be governed by Florida law and not by New Jersey law. First, the contract was entered into in Florida. Second, the contract contemplates performance of all of its essential functions in Florida. Third, the relief sought is in a Florida forum seeking to take advantage of specific Florida administrative remedies administered by an agency of the State of Florida. Fourth, notwithstanding the language of the dealership agreement providing for the application of New Jersey law, the New Jersey courts appear to be of the view that such a provision is not controlling in circumstances such as those presented in this case. In Winer Motors, Inc. v. Jaguar Rover Triumh, Inc., 506 A.2d 817 (N.J. Super. A.D. 1986), the court had before it a claim by a Connecticut based automobile dealer whose dealership agreement stipulated that New Jersey law would "govern questions as to interpretation" of the agreement. In criticizing the trial judge's application of New Jersey law, the appellate court in Winer Motors gave the following explanation as to why Connecticut law should have been applied:
The modern conflict of laws approach in contract actions applies the "most significant relationship standard." Restatement, Conflict of Laws 2d, Sec. 1288 at 575 (1971); State Farm Mutual v. Simmons' Estate, 84 N.J. 28, 34, 417 A.2d 488 (1980)
In State Farm the court determined that a choice of law assessment should encompass an evaluation of important state contacts as well as consideration of the state policies affected by, and governmental interest in,
the outcome of the controversy. " (Id. at 37,
417 A. 2d 488). Although the parties by contract have chosen New Jersey local law, we will mold the contract provision and apply not only our local law but also our conflict of laws principles, this looking to the law of Connecticut, the state with the overriding interest in the fair treatment of its franchisees. See Restatement, Conflict of Laws 2d, Sec. B, comment c, at 22 (1971).
The same principles relied on in the Winer Motors case compel a conclusion that the issues in this case should be decided on the basis of Florida law and not the law of New Jersey.
The Statutory "Specificity" Requirement
Section 320.641(1)(a) , Florida Statutes, requires that a notice of termination include "the specific grounds for such action." (emphasis supplied) The statute goes on to provide that a failure of the manufacturer to comply with the procedure set forth in the statute "shall render voidable, at the option of the motor vehicle dealer, any . . . cancellation" of the franchise agreement. Accordingly, absent a statement of specific grounds, a manufacturer cannot effectively cancel a franchise agreement except with the acquiescence of the dealer.
The statutory "specificity" requirement also has the effect of limiting the scope of the issues in cases such as this where the dealer avails itself of the right to seek an administrative determination of whether the manufacturer's proposed action is unfair or prohibited. To conclude otherwise would do violence to both the letter and the spirit of the subject statutory provisions, because dealers would be faced with an impossible burden if they were required to demonstrate that a manufacturer's reasons for termination were unfair or prohibited, without knowing what those reasons were. Accordingly, in this case, it would be unfair and prohibited for MBNA to terminate Dealer for any reason other than one or more of the five reasons stated in the termination letter of October 23, 1985. Even if there should exist some good and sufficient reasons for terminating Dealer other than those stated in the October 23 letter, if such other reason was not specifically mentioned in the termination letter, it cannot lawfully be used to justify the termination. Thus, the central issue to be resolved in this case is whether the reasons for termination stated in the letter of October 23, 1985, and only those reasons, provide a lawful basis for termination. In the paragraphs which follow each of those five reasons is addressed with a view toward determining whether each reason is (a) specifically stated, (b) unfair, and/or (c) prohibited. In this regard, it should be noted that an essential aspect of determining whether a stated reason is "unfair" is a determination of whether the evidence in this case establishes the existence of a factual basis for each stated reason.
Inaccurate Sales Reports (DDR Cards) Issue
The first stated reason for termination reads as follows, in pertinent part:
Your corporation has reported on past occasions what appears to be inaccurate sales reports, referred to as DDR cards. This was done apparently for the purpose of gaining an unfair advantage by abusing the allocation system by which Mercedes-Benz vehicles are distributed in the United States.
The foregoing language appears to be reasonably specific and thus in compliance with the statutory "specificity" requirement. It does not, however, fare so well when subjected to scrutiny under the "unfair" or "prohibited" standards.
Directing attention to the first sentence of the first stated reason for termination, the facts in this case clearly establish that there was one
instance of several inaccurate sales reports. Thus the basic assertion in the first sentence has been proved. But the nature of that proof must be considered in light of the language of Paragraph 15.D. (1) of the "Standard Provisions," which states as one of the grounds for termination of the agreement:
(1) Submission by Dealer of false applications or claims for reimbursement, refund or credit, or of false reports of the delivery or transfer of MB Passenger Cars if such applications, claims or reports are fraudulent or part of a pattern of false applications, claims or reports. . . .
Here there is no proof of false reports, fraudulent reports, or a pattern of reports only one incident involving several inaccurate reports. Where the agreement between the parties contains the foregoing language regarding determination for specified actions regarding reports, it would be
unfair to terminate a dealer for conduct which falls far short of the prescribed conduct. This is especially true in this case where the evidence shows that the inaccuracies were promptly corrected, that Dealer did not receive any unfair advantage, and that MBNA did not suffer any detriment as a result of any inaccurate sales reports.
Turning now to the second sentence of the first stated ground for termination, there is no persuasive evidence that the inaccurate sales reports were submitted for the purpose of "gaining an unfair advantage by abusing the allocation system. . . ." Quite to the contrary the greater weight of the evidence establishes that the inaccurate sales reports were submitted either as
.a result of an inadvertent mistake or as a result of confusion on the part of Dealer's personnel as to how the sales report system applied to cars sold to a leasing company. Accordingly, for the foregoing reasons, it would be unfair to terminate Dealer's agreement on the basis of the assertions in Subparagraph 1 of the termination letter.
Reception Area And Customer Lounge Issue
The essence of the second stated ground for termination is that Dealer has failed to meet a DORA commitment reading: "in 1984/85, after purchase of real property, (to) provide Mercedes-Benz identified reception area and customer lounge." Again, the language appears on its face to be reasonably specific and thus in compliance with the statutory "specificity" requirement. But, for reasons which are discussed below, the stated reason does not appear to be the real reason for this proposed ground. Accordingly, it runs afoul of the "specificity" reason for stating a reason other than the real reason. Further, for the reasons set forth below, the second stated ground for termination does not withstand scrutiny under the "unfair" or "prohibited" standards.
The assertion that Dealer failed to meet the specified DORA commitment lacks a factual and legal foundation for several reasons. First, the assertion is premature because under the wording of the cited DORA clause, Dealer had at least until the end of 1985 within which to comply with the requirement. At the time of the termination letter, more than two months remained within which Dealer could have complied with the cited DORA requirement. The assertion is also premature because the evidence clearly shows that a condition precedent to Dealer's obligation in this regard, namely, the purchase of the property, had never taken place for reasons which were not anticipated by either party. Although Dealer exercised its option to buy the
property, Dealer and the property owner became embroiled in a dispute regarding the appraised value of the property (which affected its sale price), which dispute is presently pending in the courts. Although MBNA contends that it is Dealer's fault that the real estate transaction has yet to take place, there is no persuasive proof of that contention in this record. It is also clear from the evidence in this case that the allegations of Subparagraph 2 of the termination letter were not one of the real reasons for the proposed termination. Exactly why MBNA chose to include these allegations as one of its grounds for termination is not clear--perhaps to bolster what it believed might otherwise be perceived as thin grounds for termination. But it is clear that Dealer's failure to comply with the cited provision of the DORA commitments was not a matter of serious concern to MBNA and not one of the real reasons for which MBNA sought termination.
With regard to the second stated reason for termination, it must also be noted that Paragraph 15.E. of the "Standard Provisions" of the agreement between the parties reads as follows, in pertinent part:
If MBNA determines that Dealer has failed to provide adequate facilities . . . , MBNA will advise Dealer of such failure and attempt to discuss it with Dealer. Thereafter, MBNA
shall notify Dealer in writing by Certified Mail of the nature of the failure, of the acceptable remedy and of the period of time (not less than six months) during which Dealer will be expected to remedy the failure. If the failure has not been substantially remedied at the end of the period, MBNA may terminate this Agreement by giving Dealer three months written notice.
MBNA did not give Dealer the notice required by the above-quoted language of the agreement. Corollary to the proposition that it is not unfair for a manufacturer to attempt to enforce the valid contractual obligations of another party (see International Harvester, supra) is the proposition that it is unfair for a manufacturer to attempt to terminate an agreement in a manner which is inconsistent with the manufacturer's obligations under the agreement. For all of the foregoing reasons, it would be unfair to terminate Dealer's agreement on the basis of the assertions in Subparagraph 2 of the termination letter.
The second stated reason for termination is also a prohibited reason for termination--prohibited for two separate reasons. First, it is prohibited because it runs afoul of the statutory "specificity" requirement and is therefore inconsistent with the procedure established by Section 430.641, Florida Statutes. In this regard, Section 320.641(1)(b) provides that the failure of the licensee (MBNA) to comply with the "procedure prescribed herein shall render voidable, at the option of the motor vehicle dealer, any . . . cancellation . . . of any franchise agreement. . ." Second the second stated ground for termination is a prohibited reason for termination because the language of Paragraph 15.E. of the "Standard Provisions" (quoted in the immediately preceding paragraph) by creating a specific procedure prerequisite to termination based on failure to provide adequate facilities has created an implied contractual prohibition against termination on this ground by any other means.
Change In Ownership Or Management Issue
The third stated reason for the termination provides, in relevant part:
[Y]our corporation has attempted to make a change in management by the attempted dismissal of the Dealer Operator,
Mr. Michael D. Smith as General Manager. This is in direct violation of Paragraph FOURTH of the Mercedes-Benz Dealer Agreement which states ". . . neither dealer nor the persons named above shall permit any change in the ownership or management of dealer without the prior written approval of
Mercedes-Benz of North America . . . ." This has resulted in a situation where the dealership has been functioning without any approved management.
As with the language of the first two reasons, the language quoted immediately above appears to be reasonably specific and thus in compliance with the statutory "specificity" requirement. Analysis of whether it also passes muster under the "unfair" or "prohibited" criteria is addressed in the paragraphs which follow.
First, this appears to be a prohibited ground for termination of an agreement because it is in conflict with the provision of both Section 320.643(2)(a) and (b), Florida Statutes, and Section 320.644, Florida Statutes. The first of these provisions prohibits a manufacturer from, among other things, imposing any penalty on a dealer who transfers or attempts to transfer an ownership interest in the dealership to any other person. The second of these provisions has a similar prohibition with respect to imposing a penalty on a dealer who changes the executive management control of the dealership. (Both statutes establish a procedure by which the manufacturer can request a hearing with respect to certain limited issues regarding such changes.) BNA has argued that application of these statutory prohibitions to the instant case would constitute an unconstitutional impairment of its contract. However, as noted earlier, those constitutional claims cannot be resolved in this forum, and until otherwise decided by a court, the statutes must be given effect. Accordingly, it is concluded that the third stated ground for termination is prohibited by statute.
Because the third stated ground for termination is a statutorily prohibited ground, no useful purpose would be served by a lengthy discussion as to whether it would otherwise be a fair ground for termination. Suffice it to say that, for reasons analogous to those hereinafter discussed regarding the fourth stated ground for termination, the third stated ground would be a fair basis for termination under the provisions of the agreement, were it not for the statutory prohibitions. This conclusion is based largely on the observations in International Harvester, supra, to the effect that it is appropriate for a manufacturer "to enforce the valid contractual obligations of another party." Particularly significant in this regard is Ginsburg's lack of candor in his relationship with MBNA once he began to suspect he had problems with Smith that might result in action that would require MBNA's approval.
Management Dispute Issue
The fourth stated ground for terminating the agreement states, in essence, that Dealer's management is involved in a "management dispute." It goes on to state that MBNA has previously invoked the provisions of Paragraph 15.D.(g) of the "Standard Provisions," that the 90-day period has expired, and that the management dispute continues. As evidence that the dispute still continued, the statement of grounds included mention of the transcript of a court proceeding involving litigation by Mike Smith against Dealer, Ginsburg, and others, ". . . as well by Mr. Smith's recent appearance at the dealership and the attempted arrest of him by other parties at the dealership." Although not as clearly worded as the first three stated grounds, the fourth stated ground nevertheless appears to be sufficiently specific to pass muster with the statutory "specificity" requirement.
This stated ground for termination must be considered in conjunction with the language of Paragraph 15.D. (g) of the "Standard Provisions," which provides that an agreed basis for termination is:
(g) Any disagreement between or among the Dealer Operators or Owners of Dealer which in MBNA's opinion may adversely affect the conduct of Dealer's business or the interests of MBNA, providing the disagreement continues three (3) months after notice to Dealer by MBNA that the disagreement must be
resolved. . .
Shortly after MBNA became aware of the dispute between Mike Smith (a Dealer Operator and a Dealer Owner) and Ginsburg (a Dealer Owner), it sent written notice to Dealer to the effect that the dispute must be resolved within
90 days. That notice was sent more than 90 days prior to the termination letter of October 23, 1985. Accordingly, MBNA has complied with the contractual prerequisites to enforcement of the provisions of Paragraph 15.D.(g) of the "Standard Provisions." What remains to be discussed is whether MBNA's enforcement of those provisions would be "unfair" or "prohibited."
There does not appear to be any basis upon which it could be concluded that termination on this ground would be prohibited either statutorily or contractually. As previously noted, MBNA has complied with the contractual prerequisites to this ground for termination. The question of its fairness is a bit more thorny.
On MBNA's side are the propositions well established in the Florida courts that it is appropriate for a manufacturer "to attempt to enforce the valid contractual obligations of another party," (International Harvester, supra) and that "[t]he right of a manufacturer to maintain the integrity of his trade name in the market place is a valuable right which a disreputable franchise can quickly destroy," (Yamaha Parts, supra). MBNA's situation in this regard is rather analogous to that of the manufacturer in General Motors Corporation v. The MAC Company, 247 F.Supp 723 (D.Colorado 1965), where, in a case involving very similar facts, the court stated:
We are struck by the fact that General Motors was faced with a dilemma in dealing with these two warring partners. General Motors did not start the fight but was the mediator.
Unless we are to conclude that a manufacturer can not terminate a dealership on the basis of substantial violations of its terms, it is clear that the first counterclaim [failure to act in good faith in terminating a dealership] is wholly without merit.
Although, for reasons noted earlier, federal court decisions are not dispositive of similar Florida issues, when considered in light of International Harvester, supra, and Yamaha Parts, supra, The MAC Company case is persuasive authority for the proposition that it is fair for a manufacturer to enforce, even by termination, a contractual provision which requires "warring partners" (or in this case, warring stockholders) to make peace in 90 days, or else.
The primary argument against such a ground for termination is that it is an unduly harsh remedy, especially when note is taken of the fact that in many of the disputes between principals in a dealership, at least one of the warring principals will be innocent of any wrongdoing and simply the victim of the unreasonableness of his partners or fellow stockholders. But in such a situation it must be remembered that the manufacturer will often be innocent, too. Harsh as the results may sometimes seem in a particular situation, it appears to be a valid contractual obligation for a manufacturer to include in its agreement a provision such as Paragraph 15.D.(g) which requires the principals of a dealership to resolve within 90 days any disputes which are adversely affecting the dealership operations. Otherwise, a manufacturer would have no way to protect the integrity of its trade name from the ravages of a prolonged war between dealership principals. Accordingly, the fourth stated ground for termination is a fair ground.
Misrepresentation Of Ownership Issue
The fifth, and final, stated ground for termination of the agreement states, in relevant part, ". . . that Mr. Ginsburg and Mr. Smith misrepresented the ownership interest each was required to have as a condition precedent to the execution of the Dealer Agreement." This final stated ground goes on to also assert that ". . . this misrepresentation as to the ownership of the corporation also constitutes a material breach of the Dealer Agreement .
. . ." At first blush the language of this final stated ground for termination appears to be specific enough, but further developments cast doubt on what MBNA really had in mind when it wrote this language. And in this regard it should be kept in mind that at this point in the saga, MBNA appears to have been relying primarily on Mike Smith's side of the story, a mistake also made by the trial judge before whom the transcript relied upon by MBNA was made. [See footnote three to the opinion in Mike Smith Pontiac GMC, Inc. v. Smith, 486 So.2d 89 (Fla. 5th DCA 1986).]
There are both factual and legal problems with MBNA's position on this issue. Turning first to the factual problems, part of MBNA's contention in its proposed conclusions of law is that one aspect of the misrepresentation it is relying upon is the misrepresentation by silence in the failure of Ginsburg and Smith to tell MBNA about their "Operating - Financial Agreement," particularly the part of the agreement to the effect that Smith agrees not to exercise any right to purchase additional stock which may be required by any franchisor manufacturer. MBNA goes on to argue that if it had known about this aspect of the agreement between Ginsburg and Smith, it would never have entered
into the franchise agreement because of MBNA's written policy regarding absentee ownership, which is in conflict with the portion of the "Operating - Financial Agreement" provision in which Smith agrees not to exercise the right to purchase more than 25 percent of Dealer's stock.
While MBNA asserts that this is a material breach of the dealership agreement, the fact of the matter is that this aspect of the dispute turns on a document (MBNA's absentee ownership policy) which is not a part of the dealership agreement and which was not even fully discussed with Ginsburg and Smith. Just as Ginsburg and Smith never showed MBNA a copy of their "Operating
- Financial Agreement," MBNA never showed Ginsburg and Smith a copy of MBNA's written absentee ownership policy. And just as Ginsburg and Smith never told MBNA that Smith had agreed to waive any right to purchase additional stock, MBNA never told Ginsburg and Smith that MBNA had a policy whereby all dealer- operators were required to have the right to purchase up to 51 percent of the dealership stock. Smith's right to buy up to 51 percent of the dealership stock could not have been a "condition precedent to execution of the Dealer Agreement" because MBNA never told Ginsburg or Smith about any such condition. On this state of affairs, it would not be fair for MBNA to terminate a dealership agreement on the basis of MBNA's "secret" absentee ownership policy because of its subsequent discovery of Ginsburg's and Smith's "secret" "Operating - Financial Agreement."
Another part of MBNA's contentions in this regard is that Ginsburg and Smith misrepresented the amount of stock owned by Smith. The actual representations made in this regard were that Ginsburg owned 75 percent of the stock and Smith owned 25 percent. MBNA contends this is a misrepresentation because by operation of the undisclosed "Operating - Financial Agreement" between Ginsburg and Smith, Smith did not really own anything because all of the stock nominally in Smith's name was 100 percent under the control of Ginsburg and did not really belong to Smith. A fair reading of the "Operating - Financial Agreement" between Ginsburg and Smith leads to the conclusion that at least up until June 21, 1985, Smith was in fact the owner of 25 percent of the stock of Dealer. While that stock was mortgaged to the hilt, was being held in escrow as security for the amounts owed on the stock, and was subject to the possibility of forfeiture in the event of Smith's default under various provisions of his agreement with Ginsburg, at all times material to the MBNA termination letter, Smith was the owner of 25 percent of the stock. Thus, there was no misrepresentation about the "ownership" of the stock. As noted in the findings of fact, there were misrepresentation as to the source of funds for Smith's purchase of his investment in 25 percent of the stock, but those misrepresentation are irrelevant to these proceedings because they are not mentioned in the MBNA letter of October 23, 1985, as one of the specified grounds for termination of the agreement.
For the foregoing reasons the fifth stated ground for termination of the agreement is insufficient. First, it lacks the specificity required by the statute. It was not until sometime during the course of the hearing that it was possible to ascertain the basis of MBNA's contentions on this issue. This lack of specificity causes the fifth stated ground to be a prohibited ground for failure to be in compliance with the required statutory procedures. The fifth stated ground is also an unfair basis for termination of the agreement for two reasons. First, it is unfair because it does not involve any material breach of the agreement--the policy which is alleged to have been breached is not part of the agreement between the parties. Second, it is unfair because insofar as the fifth stated ground is based on the contention that Smith did not own 25 percent of Dealer's stock, it is based on a contention that is contrary to the evidence.
On the Basis of all of the foregoing, it is hereby recommended that the Department of Highway Safety And Motor Vehicles enter a final order to the following effect:
Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 1 of the termination letter would be unfair;
Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 2 of the termination letter would be both unfair and prohibited;
Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 3 of the termination letter would be prohibited;
Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 4 of the termination letter would be fair;
Concluding that termination of the Dealer's agreement for the grounds alleged in Subparagraph 5 of the termination letter would be both unfair and prohibited; and
Concluding that the relief request in the Dealer's verified complaint should be denied.
DONE AND ENTERED this 1st day of May, 1987, at Tallahassee, Florida.
MICHAEL M. PARRISH
Hearing Officer
Division of Administrative Hearings The Oakland Building
2009 Apalachee Parkway
Tallahassee, Florida 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 1st day of May, 1987.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 86-0271
The following are my specific rulings on each of the proposed findings of fact submitted by each parties.
Findings proposed by Petitioner/Dealer
(The numbers which follow correspond to the paragraph numbers of the proposed findings of fact contained in the proposed recommended order filed by the Petitioner/Dealer.)
Accepted in substance.
Accepted in substance.
First, second, and third sentences are rejected as irrelevant. Fourth sentence is accepted. Fifth sentence is rejected as irrelevant. Sixth and seventh sentences are rejected as argument.
Accepted in substance.
Rejected as subordinate and unnecessary details. Also portions rejected as not fully supported by the evidence and as constituting editorial excesses.
Rejected as subordinate and unnecessary details and as a summary of testimony rather than proposed findings.
Rejected as subordinate and unnecessary details. Also, some details not fully supported by the evidence.
Rejected as subordinate, unnecessary details.
Rejected as irrelevant, subordinate, or unnecessary details. (Findings have been made as to the provisions of the termination letter.)
Accepted.
Rejected because this entire paragraph consists of a summary of or quotation of testimony and does not propose a fact based on any testimony.
Rejected as irrelevant and immaterial.
First sentence is accepted. Second and third sentences are rejected as constituting argument rather than a proposed finding. (The merits of the argument are addressed in the conclusions of law portion of this recommended order.)
Accepted in substance.
Accepted.
Accepted.
Accepted in substance.
Rejected as irrelevant or subordinate details.
Accepted in substance.
Rejected because this entire paragraph consists of a summary of testimony and does not propose a fact based on any testimony.
Rejected as subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Substance of last sentence accepted. The remainder of this paragraph is rejected as constituting unnecessary details.
Last sentence rejected as unnecessary. The remainder of this paragraph is accepted.
Substance of the fourth sentence is accepted. The remainder of this paragraph is rejected as constituting unnecessary details.
Accepted.
Accepted in substance.
Rejected as argument. The merits of the argument are addressed elsewhere.
Rejected as argument and as unnecessary details.
Rejected, primarily because much of it is irrelevant. Also rejected because much of it constitutes argument about credibility rather than proposed findings.
Rejected because it is all legal argument. Such arguments belong in a separate brief or in the conclusions of law portion of a proposed recommended order--not in the middle of the proposed findings of fact.
Accepted.
First two sentences are accepted. The last sentence is rejected: the first clause because it consists of unnecessary detail and the second clause because it is a legal conclusion.
First two sentences are accepted. Last sentence is rejected as irrelevant.
The essence of this paragraph is accepted with the deletion of the quotations of testimony and other unnecessary details.
Rejected as a totally unnecessary quotation of testimony which contains not a single proposed finding of fact and ends in an unnecessary snippy remark.
Rejected as irrelevant or subordinate details.
Rejected as irrelevant or subordinate details.
Rejected as irrelevant or subordinate details.
Rejected as irrelevant or subordinate details.
Rejected as irrelevant or subordinate details.
The first sentence is rejected as argument. The quotation from the contract is accepted. The first sentence following the quotation is rejected as irrelevant. The last sentence is rejected as constituting a legal conclusion.
Rejected as irrelevant or subordinate details.
Rejected as irrelevant or subordinate details.
Accepted in substance.
Rejected as irrelevant, subordinate, and unnecessary.
Rejected as irrelevant, subordinate, and unnecessary.
Rejected as irrelevant, subordinate, and unnecessary.
Accepted.
Rejected as subordinate and unnecessary details.
Accepted in substance.
Accepted.
Accepted.
Accepted.
Accepted in substance.
Rejected as subordinate and unnecessary details.
Rejected as irrelevant and subordinate details. Also rejected because portions are not consistent with the greater weight of the evidence. Finally, portions rejected as constituting argument.
Rejected as constituting legal argument. The merits of the argument are addressed elsewhere in this recommended order.
Rejected as constituting legal argument.
Rejected as subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Accepted.
Accepted.
Accepted in substance with unnecessary details and quotations omitted.
Second sentence accepted in substance. The remainder of this paragraph is rejected as irrelevant.
All of this paragraph is rejected as irrelevant details with the exception of the portion to the effect that MBNA was not told about the problem.
Rejected as subordinate and unnecessary details.
Accepted in substance.
Accepted in substance.
Accepted in substance with many irrelevant details omitted and some further findings for clarification.
Rejected as constituting irrelevant details.
Accepted in substance with many irrelevant details omitted. Also omitted are certain editorial excesses.
Accepted in substance with certain editorial excesses omitted.
Accepted in substance with a lower percentage figure more consistent with the evidence.
First three sentences accepted in substance. Fourth and fifth sentences rejected as subordinate, unnecessary and cumulative details. Sixth and seventh sentences rejected as constituting argument or legal conclusions.
Rejected as subordinate and unnecessary details, not all of which are warranted by the evidence.
The substance of the first sentence and the substance of the quoted language in the last three lines are accepted. The remainder is rejected as irrelevant or subordinate details.
Rejected as subordinate, unnecessary details, not all of which are warranted by the evidence.
Accepted in substance.
Accepted in substance.
First sentence is accepted. Second sentence is rejected as irrelevant.
Rejected as irrelevant or subordinate details, not all of which are supported by the evidence.
Rejected as irrelevant or subordinate details, not all of which are supported by the evidence.
Accepted.
All but last sentence accepted. Last sentence rejected as argument.
Rejected as subordinate and unnecessary details, as well as argument.
First sentence accepted. Last two sentences rejected as cumulative or as irrelevant and subordinate details.
Rejected for the most part because it consists of subordinate and unnecessary details. Also rejected because portions are not supported by persuasive competent substantial evidence or are contrary to the greater weight of the evidence.
Rejected as constituting primarily argument rather than proposed findings of fact.
Accepted.
Rejected because it is primarily argument rather than proposed findings.
Rejected as subordinate and unnecessary details.
Rejected as argument.
Rejected as argument.
Rejected as argument.
Rejected as argument.
Rejected as argument.
Rejected as argument.
Accepted.
Rejected as argument rather than proposed findings.
Rejected as subordinate details, some of which are not supported by the persuasive evidence.
Rejected as constituting a mixture of subordinate details and argument.
Accepted in substance.
Rejected as constituting a mixture of subordinate details and argument.
First three sentences accepted in substance. Penultimate sentence rejected as argument. Last sentence rejected as argument and as containing inferences not warranted by the evidence.
Rejected as constituting primarily argument.
Rejected as argument rather than proposed findings.
Rejected as argument rather than proposed findings.
Rejected as subordinate and unnecessary detail.
Accepted.
First and third sentences rejected as unnecessary commentary about the record. Second sentence rejected as erroneous argument. Fourth sentence rejected as cumulative. Quoted material rejected as cumulative. Last two sentences rejected as cumulative.
Rejected as argument.
Rejected as argument.
The relevant terms of the agreement between Smith and Ginsburg are included in the findings. The remainder of this paragraph is rejected as subordinate details and argument.
First sentence accepted. Second and third sentences rejected as cumulative. Fourth sentence rejected as contrary to the greater weight of the evidence. Fifth sentence rejected as cumulative. Sixth sentence rejected as contrary to the greater weight of the evidence. Seventh sentence accepted.
First sentence is rejected as contrary to the greater weight of the evidence. Second and third sentences are accepted in substance. The remainder of the paragraph is rejected as irrelevant and subordinate details.
First sentence rejected as contrary to the greater weight of the evidence. Second sentence rejected as conclusion of law. First part of third sentence accepted; last part rejected as argument.
Findings proposed by Respondent/MBNA
(The numbers which follow correspond to the paragraph numbers of the proposed findings of fact contained in the proposed recommended order filed by the Respondent/MBNA.)
Accepted.
Accepted.
Accepted.
Accepted.
Accepted.
Accepted.
Rejected in part as misleading, because the franchise agreement was entered into by two corporations.
Rejected in part for reasons stated immediately above.
Accepted.
Covered in introductory material.
Accepted.
Rejected as imprecise statement of reasons. Exact stated reasons are included in findings of fact.
Accepted.
Accepted.
Accepted.
Accepted in substance.
Accepted.
Accepted.
Accepted in substance.
Accepted in substance.
Rejected as irrelevant.
Rejected as irrelevant.
Rejected as irrelevant.
Accepted in substance with some subordinate and unnecessary details omitted.
First two lines and quoted contract language accepted. The remainder of this paragraph is rejected as irrelevant or subordinate and unnecessary details.
Accepted in substance.
Accepted in part to the extent of including the text of the written policy. Remainder rejected as contrary to the greater weight of the evidence.
Rejected as irrelevant.
Accepted in substance.
Accepted.
Rejected as subordinate or unnecessary details.
Rejected as constituting irrelevant or subordinate details, some of which are not fully consistent with the greater weight of the evidence.
First sentence rejected as contrary to the greater weight of the evidence. Remainder of the paragraph rejected as irrelevant.
Accepted in substance.
Accepted in substance.
Rejected as irrelevant.
Accepted in substance with numerous irrelevant details omitted.
Accepted in substance.
Rejected as a mixture of irrelevant or subordinate details and argument.
Accepted in substance.
Accepted.
First sentence accepted in substance. The remainder of this paragraph is rejected as constituting irrelevant or subordinate and unnecessary details.
First sentence accepted in substance. The remainder of this paragraph is rejected as constituting irrelevant or subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Rejected as irrelevant or as subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Rejected as subordinate and unnecessary details.
Accepted in substance.
Accepted.
Rejected primarily because of consisting of irrelevant or subordinate details. Also rejected because several details, including final sentence, are not supported by persuasive evidence.
Rejected as irrelevant to this proceeding.
Rejected as a summary of testimony and not a proposed finding and, in any event, as subordinate and unnecessary details.
First two sentences accepted in substance. Last sentence rejected as irrelevant.
Rejected as subordinate and unnecessary details.
Accepted in substance.
Rejected as irrelevant or subordinate and unnecessary details.
First two sentences are rejected as contrary to the greater weight of the evidence. Last two sentences are accepted in substance.
First sentence rejected as not fully supported by competent substantial evidence. Second sentence rejected as subordinate and unnecessary details. Third sentence rejected as not supported by competent substantial evidence. Fourth and fifth sentences rejected as irrelevant. Sixth sentence rejected as not supported by competent substantial evidence.
Accepted in substance.
All but last sentence accepted in substance. Last sentence rejected as contrary to the greater weight of the evidence.
First sentence rejected as constituting an over- simplification. Other findings have been made regarding this matter. Second sentence is rejected as unnecessary details. The last sentence is accepted in substance.
Accepted in substance.
Accepted in substance.
Rejected as irrelevant or subordinate and unnecessary details.
Rejected as irrelevant or subordinate and unnecessary details.
Rejected as irrelevant or subordinate and unnecessary details.
Accepted in substance.
First three sentences accepted in substance. Last two sentences rejected as irrelevant.
Accepted in substance with some adverbs and adjectives omitted in the interest of accuracy.
All but last sentence accepted in substance with some unnecessary details omitted. Last sentence rejected as contrary to the greater weight of the evidence.
Rejected as irrelevant in view of other evidence regarding MBNA's position with regard to a successor dealer/operator.
Accepted in substance.
Rejected as irrelevant or subordinate and unnecessary details.
Accepted.
First two sentences accepted in substance. Remainder of this paragraph rejected as subordinate and unnecessary details.
Rejected as cumulative and unnecessary.
Accepted in substance.
Rejected as constituting argument rather than proposed findings of fact.
Rejected as constituting argument rather than proposed findings of fact.
Rejected because of having argument inextricably intertwined with any proposed findings in this paragraph.
Rejected as argument about other party's position and not proposed finding of fact.
First sentence is rejected as ambiguous and as subordinate and unnecessary. Second sentence is rejected as ambiguous and as constituting argument. Third sentence rejected as irrelevant. Fourth sentence rejected as ambiguous and as not fully consistent with the evidence. Fifth sentence rejected in part as irrelevant and in part as contrary to the greater weight of the evidence.
Rejected as argument rather than proposed findings.
First sentence accepted in substance. Second sentence rejected as not supported by persuasive competent substantial evidence.
Rejected as argument rather than proposed findings.
First three sentences rejected as contrary to the greater weight of the evidence. Fourth sentence rejected as ambiguous rhetorical excess; too broad to be meaningful and not fully supported by the evidence. Fifth sentence rejected as irrelevant or subordinate details. Sixth and seventh sentences rejected as not supported by persuasive competent substantial evidence.
Rejected as primarily constituting argument or legal conclusions; what few facts are included are repetitious and cumulative.
Rejected as primarily constituting argument or legal conclusions; what few facts are included are repetitious
and cumulative.
Accepted in substance.
Rejected as contrary to the greater weight of the evidence; there were inaccurate cards, but not "false" cards.
The first three sentences are rejected in part as an argumentative over-simplification that omits the crux of the matter, and as also constituting subordinate details which are irrelevant in light of other evidence. The remainder of the paragraph is rejected as constituting subordinate and unnecessary details, some of which are not fully supported by the evidence.
The first sentence is rejected as exaggeration not supported by the evidence. Also largely irrelevant in light of other evidence. The remainder of the paragraph is rejected as constituting argument or legal conclusions.
Rejected as not supported by persuasive evidence
and as, in any event, being such a broad, vague, statement as to be virtually meaningless.
First three sentences rejected as irrelevant argument; the statements of counsel are not evidence. The remainder of this paragraph is rejected as irrelevant.
Rejected because it consists mostly of argument. To the extent it incorporated proposed facts, most of them are irrelevant, subordinate, or unnecessary. What few relevant facts are proposed have been included elsewhere.
Rejected as argument instead of proposed findings.
All but last sentence rejected as primarily constituting argument. Last sentence accepted in substance.
Rejected. This is primarily a description of the issues the Dealer seeks to litigate and argument about legal issues. What few facts are proposed here have been found elsewhere to the extent relevant.
Accepted in substance.
Rejected as argument or conclusions of law rather than proposed findings of fact.
Rejected as an argumentative 0ver-simplification which is in part irrelevant and in part not supported by persuasive evidence.
Rejected as argument or conclusions of law rather than proposed findings of fact.
COPIES FURNISHED:
Henry L. Kaye, Esquire STIERER, AMENDOLA, KAPLAN, HYMAN & KAYE
1401 Harvey Building
224 Datura Street
West Palm Beach, Florida 33401
John Radey, Esquire
AURELL, FONS, RADEY & HINKLE
Post Office Drawer 11307 Tallahassee, Florida 32301
William J. Dunaj, Esquire Teresa Ragatz, Esquire MERSHON, SAWYER, JOHNSTON, DUNWODY & COLE
Southeast Financial Center Suite 4500
200 South Biscayne Boulevard Miami, Florida 33131
Leonard R. Mellon, Executive Director Department of Highway Safety and Motor Vehicles
Neil Kirkman Building Tallahassee, Florida 32399-0500
| Issue Date | Proceedings |
|---|---|
| May 01, 1987 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Nov. 09, 1987 | Agency Final Order | |
| May 01, 1987 | Recommended Order | Extensive discussion of many issues regarding the termination of automobile dealer franchises. |
