McKEAGUE, Circuit Judge.
The goal of every car manufacturer is to sell as many cars as possible. To accomplish this goal they need dealers, which must invest substantial resources to build attractive facilities and advertise the latest models. Superficially, dealers share the manufacturer's goal of selling as many cars as possible. But their mutual objectives may diverge if the manufacturer seeks to increase sales by appointing new dealers, whose efforts may erode the sales of existing dealers. Michigan recognized this potential problem in 1981 when it enacted the Motor Dealers Act (the "Act"), which grants car dealers certain limited territorial rights, even when the dealer has a nonexclusive franchise. The application of the Act to the dealer agreement between Kia Motors America, Inc. ("Kia") and Glassman Oldsmobile Saab Hyundai, Inc. ("Glassman")
The Act requires car manufacturers to provide notice to an existing dealer before establishing a new dealer within a certain distance of the existing dealer's location. Receipt of notice gives the existing dealer a cause of action to challenge the proposed new dealer. Kia and Glassman entered into a Dealer Sales and Service Agreement (the "Agreement") in 1998, when the distance for notice was 6 miles. The Michigan Legislature amended the Act in 2010 to increase the distance to 9 miles (the "2010 Amendment"). Kia now intends to establish a new dealer more than 6 miles, but less than 9 miles, from Glassman's location. The district court found that the parties did not agree to comply with the 2010 Amendment and that the 2010
The facts are uncomplicated. Kia imports and distributes Kia products in the United States. Glassman is a car dealer in Southfield, Michigan. Their Agreement is a relatively simple contract. It appointed Glassman as an authorized Kia dealer. It contains provisions governing things such as sales and delivery, operation of the dealership, and service and parts. Importantly for this appeal, the Agreement clearly states that Glassman's right to sell Kia products is not exclusive. Kia "expressly reserves the unrestricted right to sell Kia Products itself and to grant others the right to sell Kia Products, whether or not in competition with [Glassman]." R. 1-2, Agreement, PageID # 17. Glassman understood that it was "not being granted an exclusive right to sell Kia products in any specified geographic area." Id. at PageID # 18.
Although its right to sell Kia products is nonexclusive, Glassman agreed to assume certain responsibilities in its geographic region. It agreed to "vigorously and aggressively promote, solicit and make sales of Kia Products within its [Area of Primary Responsibility]" — a location left undefined in the Agreement.
Kia's right to establish a new dealer in Glassman's vicinity is unrestricted by the Agreement, but it is restricted by an anti-encroachment provision
Id. (emphasis added). When Kia and Glassman signed the Agreement in 1998, the "relevant market area" was defined as the area within 6 miles of the proposed new dealer. However, on August 4, 2010, the Act was amended to extend the distance to 9 miles. See 2010 Mich. Pub. Acts No. 139 (codified at § 445.1566(1)(a)).
Sixteen days after the 2010 Amendment became effective, Kia informed Glassman that it intended to establish a new dealer in Troy, Michigan. The new dealer would be located about 7 miles from Glassman's location (thus falling within the "relevant market area" under the 2010 Amendment, but outside the "relevant market area" when the Agreement was signed in 1998). When Glassman protested that it was entitled to notice under the Act, Kia filed a declaratory judgment action in the United States District Court for the Eastern District of Michigan. Kia sought a declaration that the 2010 Amendment did not require it to give notice to Glassman and did not give Glassman the right to protest the new dealer. Glassman filed a counter-complaint asking for the opposite declaration. The parties then filed cross-motions to dismiss and for judgment on the pleadings.
The district court granted Kia's motions and denied Glassman's motions. It concluded that when the parties used the term "applicable law" when referring to Kia's right to establish a new dealer in Glassman's Area of Primary Responsibility, they meant the law in effect in 1998 and did not intend to incorporate future changes in the law. It further determined that the 2010 Amendment did not operate retroactively to affect a contract entered into before its enactment because the Amendment is substantive — not procedural — in nature. Kia had argued that applying the 2010 Amendment retroactively would violate the Contracts Clauses of the Michigan and United States Constitutions, but because the district court found that the 2010 Amendment was not retroactive, it did not reach this question. Glassman timely appealed.
We review de novo the district court's grant or denial of a Rule 12(b)(6) motion to dismiss and a Rule 12(c) motion for judgment on the pleadings. Tucker v. Middleburg-Legacy Place, LLC, 539 F.3d 545, 549 (6th Cir.2008).
The issue in this case is whether the 2010 Amendment requires Kia to give Glassman notice. Glassman contends that it does and has advanced both a contract argument and a statutory argument to support its position. We tackle first the contract argument and ultimately find that it fails.
Glassman contends that the parties agreed to comply with subsequent changes to the Act, including the 2010 Amendment, when they stated that Kia could establish new dealers in Glassman's Area of Primary
Furthermore, although the parties have not agreed what state's law governs their agreement,
Glassman's argument that the Agreement as a whole controverts this interpretation is alluring but ultimately fails. Glassman points out that numerous provisions in the Agreement define the parties' duties according to what the law requires. Two provisions in particular require Glassman to comply with applicable consumer-protection laws and applicable safety and emission-control laws. Kia agrees that these provisions require Glassman to comply with current laws, not just the laws in effect when the Agreement was signed. Therefore, argues Glassman, the Agreement should be interpreted to also require Kia to comply with the current anti-encroachment law.
But we cannot ignore the important distinction between the provision at issue here and the other provisions that reference applicable law. Those other provisions primarily concern Glassman's responsibility, as a car dealer, to comply with generally applicable laws and regulations. In contrast, the provision at issue here directly concerns the relationship between Kia and Glassman. The 2010 Amendment would alter a key aspect of the parties' bargain — the nonexclusive nature of Glassman's distribution rights and Kia's right to establish new dealers. Amendments to consumer-protection and emission-control
Having determined that the Agreement does not incorporate the 2010 Amendment, we turn next to Glassman's statutory argument. We must decide whether the 2010 Amendment operates retroactively to change Kia's obligations under the Agreement. We conclude that it does not.
In Michigan, the question of whether a statute should be applied retroactively or only prospectively is a question of legislative intent. Frank W. Lynch & Co. v. Flex Technologies, Inc., 463 Mich. 578, 624 N.W.2d 180, 182 (2001). But there is a presumption that statutes operate only prospectively "unless the contrary intent is clearly manifested." Id. (quotation omitted). This presumption holds "especially true if retroactive application of a statute would impair vested rights, create a new obligation and impose a new duty, or attach a disability with respect to past transactions." Id. The Michigan Supreme Court has repeatedly observed that the Michigan Legislature "knows how to make clear its intention that a statute apply retroactively," so the absence of express retroactive language is a strong indication that the Legislature did not intend a statute to apply retroactively. See Brewer v. A.D. Transport Express, Inc., 486 Mich. 50, 782 N.W.2d 475, 478 (2010) (quoting Frank W. Lynch & Co., 624 N.W.2d at 183). The "requirement that the Legislature make its intention clear" "is especially true when a new statutory provision affects contractual rights, an area `in which predictability and stability are of prime importance.'" Frank W. Lynch & Co., 624 N.W.2d at 184 (quoting Landgraf v. USI Film Prod., 511 U.S. 244, 271, 114 S.Ct. 1483, 128 L.Ed.2d 229 (1994)).
There is an exception to the presumption against retroactivity when a statute can be classified as remedial or procedural. Id. at 183. "[S]tatutes which operate in furtherance of a remedy or mode of procedure and which neither create new rights nor destroy, enlarge, or diminish existing rights are generally held to operate retrospectively unless a contrary legislative intent is manifested." Id. (quotation omitted). Although Michigan courts describe the exception as encompassing laws that are either remedial or procedural, in this context the terms essentially mean the same thing — laws that are procedural in nature and do not create or destroy substantive rights. See id.; see also Dale Baker Oldsmobile, Inc. v. Fiat Motors of North America, Inc., 794 F.2d 213, 217 (6th Cir.1986) ("[R]emedial statutes involve procedural rights or change the procedures for effecting a remedy. They do not, however, create substantive rights that had no prior existence in law or contract.").
We have previously determined that another section of the Motor Dealers Act operates prospectively only. See Dale Baker Oldsmobile, 794 F.2d at 219-20. In Dale Baker Oldsmobile, the issue was whether a section that expanded a dealer's rights upon the termination of a dealer agreement applied retroactively to contracts executed before the enactment of the statute. Id. at 215. Among other things, the new section required the manufacturer to pay the dealer an amount equal to one year's rental value of the dealership premises. Id. After reviewing several
The 2010 Amendment is silent as to whether it operates retroactively or only prospectively.
Glassman argues that the 2010 Amendment is procedural because it constituted a "minor change" to the definition of "relevant market area" and "did not impose any new legal duties on Kia that had not already existed in the prior version nor did it create new substantive rights for an existing dealer, such as Glassman." Appellant Br. 32, 37. For support, it cites a decision from the Michigan Supreme Court in which that court held that an amendment to the Mechanics' Lien Act extending the time for filing a lien from 60 days to 90 days was procedural and thus applied retroactively. See Hansen-Snyder Co. v. Gen. Motors Corp., 371 Mich. 480, 124 N.W.2d 286, 288 (1963). The court reasoned that since the right to acquire a lien was not affected, the only change "pertained solely to [the] procedure for effectuating the statutory right already existing." Id.
But the amendment in Hansen-Snyder is not analogous to the 2010 Amendment. Before the Amendment, the statute allowed Kia to establish a new dealer more than six miles from Glassman without restriction. After the Amendment, Kia must provide notice before doing so, and that notice allows Glassman to bring a declaratory judgment action to protest the new dealer. Clearly, the Amendment imposes a new substantive duty and provides a new substantive right that did not previously exist. Rather than change the mechanics or time frame for objecting to a new dealer, the Amendment gives Glassman the substantive right to object. Therefore, it cannot be viewed as procedural, and the presumption against retroactivity applies.
Before leaving the issue of retroactivity we must briefly dispose of Glassman's two remaining arguments, both of which are similar to arguments we have rejected in previous opinions. First, Glassman disputes that a retroactivity issue even exists in this case. Since Kia sought to establish the new dealer after the 2010 Amendment, argues Glassman, requiring Kia to comply with the Amendment would require applying it prospectively only. However, this argument ignores the fact that the Amendment affects Kia's rights under a contract that predates the Amendment, and we therefore rejected it in a prior case. See Bob Tatone Ford, Inc. v. Ford Motor Co., 197 F.3d 787, 792 (6th Cir.1999) (applying Ohio law). A statute operates retroactively when it "`takes away or impairs vested rights acquired under existing laws.'" Landgraf, 511 U.S. at 269, 114 S.Ct. 1483 (quoting Soc'y for Propagation of the Gospel v. Wheeler, 22 F. Cas. 756, 767 (No. 13,156) (C.C.D.N.H. 1814) (Story, J.)). To require Kia to comply with the 2010 Amendment would clearly require us to apply the Amendment retroactively because it would take away Kia's previously unrestricted contractual
Second, Glassman disputes that Kia has a vested contractual right that would be affected by the 2010 Amendment. It argues that Kia's right to establish a new dealer was just a statutory right, which according to Glassman is not a vested right. But this argument ignores the Agreement, and we have rejected it before. See Dale Baker Oldsmobile, 794 F.2d at 220 ("This argument ignores the fact that defendant acquired contract rights at the time the parties entered the dealer agreement."). The Agreement expressly gave Kia the right to establish new dealers. Since in 1998 the law only restricted Kia's right to establish new dealers within 6 miles of Glassman's location, Kia had an unrestricted contractual right to establish new dealers outside that radius. Clearly the 2010 Amendment would affect that contractual right because it would require Kia to give Glassman notice.
Kia contends that applying the 2010 Amendment retroactively would violate the Contracts Clauses of the United States and Michigan Constitutions because its unrestricted contractual right to establish a new dealer outside the 6-mile radius would be impaired. The fact that retroactive application would raise a significant constitutional question provides an additional reason for applying the 2010 Amendment prospectively only. See Dale Baker Oldsmobile, 794 F.2d at 221 ("A state statute, which has not been authoritatively construed by the state court, should be construed in a manner which will avoid such constitutional questions."). Because we hold that the 2010 Amendment is not retroactive, we need not reach the constitutional issue.
In sum, we agree with the district court that the Agreement did not incorporate future changes in the anti-encroachment law and that the 2010 Amendment is not retroactive. We therefore