vs. ) CASE NO. 84-1239
) BRANDON CHRYSLER-PLYMOUTH, INC., ) LAKELAND CHRYSLER-PLYMOUTH DODGE, ) INC., and DEPARTMENT OF HIGHWAY ) SAFETY AND MOTOR VEHICLES, )
Respondents. )
For Petitioner: Alan M. Huss, Esquire
For Respondent: J. Philip Plyler, Esquire
Naughton Chrysler-Plymouth and Dodge, Inc. Tampa, Florida
Brandon Chrysler-Plymouth, Inc. and Lakeland Chrysler-Plymouth Dodge, Inc. Tampa, Florida
Final hearing in this case was held in Tampa on May 7 - 9, 1985. After the final hearing, the parties requested until August 2, 1985, to file their proposed recommended orders.
The issue in this case is whether respondent Department of Highway Safety and Motor Vehicles (Department) should issue to petitioner John Naughton Chrysler-Plymouth and Dodge, Inc., (Naughton CPDT) a motor vehicle dealer in license in Plant City to sell Chrysler, Plymouth, Dodge and Dodge truck makes of vehicles manufactured by petitioner Chrysler Corporation (Chrysler).
Respondents Brandon Chrysler-Plymouth, Inc., (Brandon CP) and Lakeland Chrysler- Plymouth Dodge, Inc., (Lakeland CPDT) protested and sought a hearing on the specific issue under Section 320.642, Florida Statutes (1983), whether Chrysler's "presently licensed franchised motor vehicle dealer or dealers . . . are providing adequate representation in the community or territory for such license."
Petitioner Chrysler Corporation (Chrysler) is licensed as a manufacturer of motor vehicles under Sections 320.60-320.70, Florida Statutes (1983).
Petitioner John Naughton Chrysler-Plymouth and Dodge, Inc., (Naughton CPDT) is an applicant for a license to operate as a motor vehicle dealer in Plant City, Florida, representing Chrysler for the sale of Chrysler, Plymouth and Dodge automobiles and Dodge trucks. Naughton CPDT was incorporated in September 1983. Its president and principal stockholder is John B. Naughton, Jr., (Naughton), who also has been the principal owner of John Naughton Ford, Inc., a Tampa Ford dealer, since September 1976.
Respondent Department of Highway Safety and Motor Vehicles (Department) is the Florida agency responsible for licensure of motor vehicle dealers in the State of Florida under Section 320.27, Florida Statutes (Supp. 1984).
Respondent Brandon Chrysler-Plymouth, Inc., (Brandon CP) holds a license to operate as a motor vehicle dealer in Brandon, Florida, representing Chrysler for the sale of Chrysler and Plymouth automobiles.
Respondent Lakeland Chrysler-Plymouth Dodge, Inc., (Lakeland CPDT) holds a license to operate as a motor vehicle dealer in Lakeland, Florida, representing Chrysler for the sale of Chrysler, Plymouth and Dodge automobiles and Dodge trucks.
Robert E. Vaughn, Sr., owns a majority of the stock of Brandon CP and a significant minority of the stock of Lakeland CPDT. James Bryan owns a majority of the stock of Lakeland CPDT and a significant minority of the stock of Brandon CP. Vaughn serves as President of Brandon CP and is Chairman of the Board of Brandon CP and Lakeland CPDT. Bryan is an officer of both corporations. Vaughn is primarily responsible for the operation of Brandon CP; Bryan is primarily responsible for the operation of Lakeland CPDT. However, the two dealerships are operated as if they are one in many respects. They have the same accounting policies and management policies and have overlapping personnel. For example, there is one fleet sales manager covering both stores. For all practical purposes, Brandon CP and Lakeland CPDT share common ownership.
From February 1952 until May 1980, Chrysler was represented in Plant City, Florida, for the sale of Chrysler, Dodge and Dodge truck products by Jack Ramsey Motors, Inc., and by its successor, Keland-Butler Motors, Inc. Since Keland-Butler Motors, Inc., terminated, Chrysler has not been represented by a dealership located within the city of Plant City or within the area immediately surrounding Plant City.
From August 1963 to the present time, Chrysler has been represented for the sale of Chrysler and Plymouth products within the city limits of Tampa by Northgate Chrysler-Plymouth, Inc., its successors, Buccaneer Chrysler-Plymouth, Inc., and Bay Chrysler-Plymouth, Inc.
From September 1961 to the present, Chrysler has been represented for the sale of Dodge and Dodge truck products within the city limits of Tampa by Hubert Brooks-Dodge, Inc.; from October 1973 to the present, Chrysler has been represented for the sale of Dodge and Dodge truck products within the city limits of Tampa by Bob Wilson-Dodge, Inc., too.
From October 1956 to the present, Chrysler has been represented for the sale of Chrysler and Plymouth products within the city limits of Tampa by Hawke Chrysler-Plymouth Sales, Inc., and its successor, Kenyon Chrysler- Plymouth, Inc.
From April 1973 to the present, Chrysler has been represented for the sale of Chrysler and Plymouth products in the Brandon area by Brandon CP.
From November 1958 through October 1979, Chrysler was represented for the sale of Chrysler and Plymouth products in Lakeland by Harold Fussel Chrysler-Plymouth, and its successors Burris Chrysler-Plymouth, and Sunshine Chrysler-Plymouth. In October 1979, Sunshine Chrysler-Plymouth was replaced by
Lakeland Chrysler-Plymouth, Inc., predecessor to respondent Lakeland CPDT. (See paragraphs 17 and 18 of these Findings Of Fact below.)
From September 1949 to June 1981, Chrysler was represented for the sale of Dodge and Dodge truck products within the city limits of Lakeland by Bunker Hill Dodge.
Once Brandon CP began operating its dealership, it requested of Chrysler that it be licensed to sell Dodge automobile and Dodge truck products, too. Chrysler refused to license Brandon as a "quad" dealer or to add Dodge truck responsibilities to the Brandon CP dealership. Continuing attempts by Brandon to obtain a Dodge truck dealer agreement for Brandon met with no success.
When Keland-Butler Motors, Inc., voluntarily cancelled its dealership franchise in May 1980, Chrysler actively prospected for a new dealer to replace Keland-Butler Motors, Inc., in Plant City. Due to a change in marketing strategies in the late 1970's rejecting the use of "triple" dealers like Keland- Butler Motors, Inc., in markets like the Plant City market, Chrysler sought to replace Keland-Butler Motors, Inc., with a "quad" dealership which would be authorized to sell Chrysler, Plymouth and Dodge passenger car and Dodge truck motor vehicles. On or about February 16, 1981, Chrysler gave Naughton a letter of intent to establish him as a "quad" Chrysler dealer in Plant City.
In 1981, the automobile industry and Chrysler in particular was suffering from an economic downturn and other difficulties. In the early 1980s, Chrysler lost tremendous amounts of money. Speculation of Chrysler's demise was widespread. Chrysler's declining fortunes were visited upon its dealer body. Keland-Butler Motors had lost $150,000 in 1979. Brandon CP lost money in 1978 and 1979 and lost almost $80,000 in 1980 and over $12,000 in 1981. Lakeland Chrysler-Plymouth, Inc., lost significant money starting up in 1979, over
$37,000 in 1980 and almost $15,000 in 1981. Under these conditions Brandon CP and Lakeland Chrysler-Plymouth, Inc., announced their intention to protest the proposed Naughton dealership in Plant City.
In 1981, Bunker Hill Dodge in Lakeland, in financial distress, closed its facility and proposed to sell its Dodge franchise to the local Ford dealer. On the premise that it had enough problems without such a development, Lakeland Chrysler- Plymouth, Inc. sought approval from Chrysler to obtain the Dodge and Dodge truck representation in Lakeland, and to combine it with its existing Chrysler and Plymouth representation. Such a "quad" dealership would have been contrary to Chrysler's marketing strategy for a market like Lakeland of separating its Chrysler-Plymouth dealership from its Dodge-Dodge Truck dealership, and Chrysler did not initially give its approval.
In June 1981, Chrysler, Brandon CP and Lakeland Chrysler-Plymouth, Inc., agreed to a compromise of their differences. Chrysler agreed to deviate from its marketing strategy and permit Lakeland Chrysler-Plymouth, Inc., to purchase Bunker Hill Dodge and to become a "quad" dealer for the sale of Chrysler, Plymouth and Dodge automobiles and Dodge truck products in Lakeland in return for the agreement of Brandon CP and Lakeland Chrysler-Plymouth, Inc., to drop their protests of the proposed Naughton dealership in Plant City. Brandon CP and Lakeland Chrysler-Plymouth, Inc., on their part, agreed to drop their protests because they believed the addition of the Dodge and Dodge truck franchises to the Lakeland Chrysler-Plymouth, Inc., dealership would "substantially strengthen Lakeland Chrysler-Plymouth, and therefore [they had] no objection to Chrysler's marketing plans to establish a Chrysler, Plymouth and Dodge and Dodge truck point in Plant City, Florida, in the future." The new "quad" dealer in Lakeland became Lakeland CPDT.
At the time of the agreement of Brandon CP and Lakeland Chrysler- Plymouth, Inc., not to protest the proposed Naughton dealership in Plant City, Brandon CP and Lakeland Chrysler- Plymouth, Inc., through Vaughn, believed that there was a law limiting the effectiveness of their agreement not to protest to a period of one year. Chrysler -- and in particular its representative in the negotiation of the agreement, John McLeod -- was not aware of any such law at the time the agreement was made. Later, some time before May 6, 1983, McLeod became aware of a law which he believed limited the effectiveness of the no protest agreement to a period of only 90 days.
The law to which Vaughn and McLeod had reference is Rule 15C-1.08, Florida Administrative Code, which provides that the Department "shall cause a notice to be sent to the presently licensed franchised dealers for the same make or makes of vehicles in the territory or community in which the new dealership proposes to locate, advising such dealers of the provisions of Section 320.642, Florida Statutes, and giving them and all real parties in interest an opportunity to be heard on the matters specified in that Section." The rule goes on to provide:
Such notice need not be given to any present- ly licensed notice dealer who has stated in writing that he will not protest the establish- ment of a new dealership which will deal in
the make or makes of vehicles to be included in the proposed franchise in the territory or community in which the new dealership proposes to locate. Any such statements or letters of
no protest shall have been issued not more than three months before the date of filing of the preliminary application.
Despite the agreement of Brandon CP and Lakeland CPDT not to protest the proposed Naughton dealership in Plant City, Naughton did not file an application for licensure. Naughton was not satisfied with the Keland-Butler facilities. He did not look too hard for another facility because the prognosis for the success of Chrysler and its dealers was not good at that time.
While Naughton remained on the sidelines watching the economy and Chrysler's economic fortunes, Brandon CP and Lakeland CPDT continued to make efforts to sell Chrysler products, including in and around Plant City. Both Brandon CP and Lakeland CPDT advertise in the Tampa Tribune and the Lakeland Ledger, which are distributed in Plant City. Additionally, they use television
and radio advertising which reaches the Plant City area. In 1982, Brandon CP committed to make capital improvements to its facility by building a new 7200 square foot parts warehouse, adding a mechanic's lounge and remodeling the old parts warehouse into offices for salesmen, a fleet sales office, Vaughn's office, additional clerical space, the company's comptroller's office, et cetera.
By 1983, Chrysler's economic fortunes had improved, and Naughton's interest in the Plant City dealership was rekindled. Upon contacting Chrysler, Naughton learned that Chrysler was still interested in making him a "quad" dealer in Plant City.
In September 1983, Naughton formed Naughton CPDT, which filed with the Department its preliminary application for licensure as a motor vehicle dealer representing Chrysler for the sale of Chrysler, Plymouth and Dodge automobiles and Dodge truck products. Naughton CPDT received a letter of intent from Chrysler that it would franchise Naughton CPDT as a "quad" dealer in Plant City. Several area Chrysler dealers protested, including the two that continue to protest, Brandon CP and Lakeland CPDT.
Through a combination of the efforts and investments of Brandon CP and Lakeland CPDT and the addition of the Dodge and Dodge truck franchises to the Lakeland Chrysler-Plymouth, Inc., dealership creating Lakeland CPDT, those two dealerships have been strengthened.
In 1983, Brandon CP's gross revenues increased from $12,600,000 the year before to approximately $22,000,000. Brandon CP's gross profit in 1983 was approximately $2,320,000. Its net profit was approximately $320,000. In 1984, Brandon CP's gross revenues were approximately $25,225,000, its gross profit approximately $3,275,000, and its net profit approximately $550,000.
Meanwhile, Lakeland CPDT's gross revenues in 1983 were approximately
$13,485,000, its gross profit approximately $1,400,000 and its net profit approximately $365,000. In 1984, Lakeland CPDT's gross revenues were approximately $13,160,000, its gross profit approximately $1,520,000, and its net profit approximately $294,000.
Brandon CP's gross profit per automobile sale was approximately $1,070 in 1983 and $1,138 in 1984. Lakeland CPDT's gross profit per automobile sold was approximately $1,290 in 1983 and $1,261 in 1984. Its gross profit per truck sale was approximately $1,150 in 1983 and $1,534 in 1984. The gross profit per net Chrysler automobile sold in Chrysler's Orlando Zone, which covers all of Florida and parts of South Georgia, was $809 in 1983 and $885 in 1984. For trucks, the profit per unit in the Orlando Zone was $905 in 1983 and $1,102 in 1984.
CONCLUSIONS OF LAW
The Department of Highway Safety and Motor Vehicles (Department) is responsible for licensure of motor vehicle dealers under Section 320.27, Florida Statutes (Supp. 1984). But petitioner Chrysler Corporation (Chrysler) is licensed as a manufacturer of motor vehicles under Section 320.60-320.70, Florida Statutes (1983). And Section 320.642, Florida Statutes (1983), provides:
Dealer license in areas previously served.-- The Department shall deny an application for
a motor vehicle dealer license in any community or territory where the licensee's presently licensed franchised motor vehicle dealer or dealers have complied with licensee's agree- ments and are providing adequate representation in the community or territory for such license. The burden of proof in showing inadequate re- presentation shall be on the licensee.
The purpose of Section 320.642 is to prevent a manufacturer from taking unfair advantage of a dealer by overloading a market area with more dealers than can be justified by the legitimate interests of the manufacturer and its dealers, existing and prospective. Plantation Datsun, Inc. v. Calvin,
275 So.2d 26 (Fla. 1st DCA 1973); Bill Kelly Chevrolet, Inc. v. Calvin, 322 So.2d 50 (Fla. 1st DCA 1975). But such statutes are not designed to prevent the introduction of dealer competition when it is reasonably justified in terms of market potential. Bill Kelly Chevrolet, Inc. v. Calvin, supra, at 52.
Section 320.642 "applies to the establishment of new dealerships, and not to a replacement dealer." Southside Motor Company v. Askew, 332 So.2d 613, 615 (Fla. 1976). "This determination is based on the reality that a replacement dealer placed in an existing established dealer point which has become open by virtue of a franchise cancellation does not pose a threat to other existing dealerships since the replacement dealer does not offer additional competition." Id.
In the Southside case, less than five months elapsed between cancellation of the license of the previous dealer and issuance of the license to the new dealer. In this case, the previous Chrysler-Dodge-Dodge Truck dealer in Plant City went out of business and, in May 1980, voluntarily cancelled its franchise. Chrysler actively prospected for a replacement dealer and proposed to sell a franchise to John B. Naughton, Jr. (Naughton). But, due to an economic downturn that seriously affected the car industry and Chrysler in particular in late 1981 and in 1982, Naughton did not apply for licensure until late 1983. During the two and a half years in which Chrysler was not represented in Plant City, the market would not have supported a replacement dealer. In order to survive during this time, Brandon CP and Lakeland CPDT continued to make efforts to sell cars and trucks in retail markets that had been served by the prior Plant City dealer.
Naughton CPDT does offer additional competition and does pose a threat to the protesting dealers that did not exist in 1981 and 1982. But Brandon CP and Lakeland Chrysler-Plymouth, Inc., agreed in writing in June 1981 not to protest in return for Chrysler's agreement to depart from its normal marketing strategy for a market like Lakeland and add a Dodge and Dodge Truck franchise to the Lakeland dealership, leading to the formation of Lakeland CPDT. Because they believed "this addition [would] substantially strengthen Lakeland Chrysler- Plymouth," Brandon CP and Lakeland CPDT agreed to withdraw any "objection to Chrysler's marketing plans to establish a Chrysler, Plymouth, Dodge and Dodge Truck point in Plant City, Florida, in the future." Lakeland CPDT has retained the Dodge and Dodge Truck franchises, and both Brandon CP and Lakeland CPDT have in fact become substantially stronger dealerships. Therefore, although the proposed Naughton dealership in Plant City will offer additional competition that was not there in 1981 and 1982, Brandon CP and Lakeland CPDT specifically contemplated the additional competition.
Under these circumstances, Naughton CPDT should be considered a replacement dealer of Chrysler and Dodge automobiles and Dodge Truck products in Plant City under the Southside doctrine.
An existing dealer can waive its right to invoke the provisions of Section 320.642 by giving a "no protest letter" or other effective waiver. Cf. Home Volkswagen, Inc. v. Calvin, 338 So.2d 1287 (Fla. 1st DCA 1976).
In this case, Brandon CP and Lakeland CPDT (through its predecessor) agreed in writing in June 1981 to withdraw any "objection to Chrysler's marketing plans to establish a Chrysler, Plymouth, Dodge and Dodge Truck point in Plant City Florida, in the future" because they believed the "addition [of Dodge and Dodge Truck franchises to Lakeland Chrysler-Plymouth, Inc.] [would] substantially strengthen Lakeland Chrysler-Plymouth." In return, Chrysler agreed to and did depart from its normal marketing strategy for a market like Lakeland and add Dodge and Dodge Truck franchises to Lakeland Chrysler-Plymouth, Inc., forming Lakeland CPDT. Lakeland CPDT continues to hold the Dodge and Dodge Truck franchises, and both Brandon CP and Lakeland CPDT have in fact become substantially stronger dealerships.
Brandon CP and Lakeland CPDT have contended that they and Chrysler contemplated from the outset that the no protest letter would be effective only for one year. This contention, however, is based only on the fact that the chairman of their boards of directors knew of a law which he believed limited the effectiveness of a no protest letter to one year. Chrysler's representative during the negotiations, John McLeod, did not become aware of the law until later, some time before May 6, 1983. Therefore, Chrysler bargained for the no protest letter without reference to any limitation on its effectiveness.
When McLeod did become aware of the law, he also believed it limited the effectiveness of no protest letters, but to only 90 days. Both Vaughn and McLeod were wrong. Rule 15C- 1.08, Florida Administrative Code, provides that the Department "shall cause a notice to be sent to the presently licensed franchised dealers for the same make or makes of vehicles in the territory or community in which the new dealership proposes to locate, advising such dealers of the provisions of Section 320.642, Florida Statutes, and giving them and all real parties in interest an opportunity to be heard on the matters specified in that Section." The rule goes on to provide:
Such notice need not be given to any presently licensed notice dealer who has stated in writ- ing that he will not protest the establishment of a new dealership which will deal in the make or makes of vehicles to be included in
the proposed franchise in the territory or com- munity in which the new dealership proposes to locate. Any such statements or letters of no protest shall have been issued not more than three months before the date of filing of the preliminary application.
Rule 15C-1.08 does nothing more than authorize the Department not to give notice to a "notice dealer" but only if he has on file a no protest letter from the dealer that is no more than 90 days old.
If the Department does not have a no protest letter on file, or if the only no protest letters on file are more than 90 days old, the Department is
required to send the dealer notice. But, if such a dealer attempts to invoke Section 320.642, the question whether a no protest letter which has not been filed, or one on file which is more than 90 days old, waives the dealer's right to invoke the provisions of Section 320.642 would remain to be determined in administrative proceedings under Section 120.57, Florida Statutes (Supp. 1984).
Under the circumstances of this case, Brandon CP and Lakeland CPDT cannot "repudiate the no protest letter on account of changed conditions." Milano Imported Motors, Inc. v. Alfa Romeo, Inc., 373 So.2d 722, 723 (Fla. 1st DCA 1979). Absent withdrawal, the "no protest letter" of Brandon CP and Lakeland CPDT (through its predecessor) waives their rights to invoke the provisions of Section 320.642 to protest the proposed dealerships as to any of Chrysler's makes of products. Cf. Id. at 723 (a no protest letter was valid after two years subject to remand to give the protesting dealer "an opportunity to repudiate the no protest letter on account of changed conditions").
There was an oblique reference in Chrysler's proposed findings of fact (footnote 3 on page 5) to non-rule Department policy "to limit the time period during which [no protest] letters are deemed conclusive." But there was no evidence of any such non-rule policy. Absent evidence, no non-rule agency policy can be found as a matter of fact; absent such a finding of fact, no legal conclusion can be drawn based on such a non-rule policy. Cf. Anheuser-Busch, Inc. v. Dept. of Business Regulation, 393 So.2d 1177 (Fla. 1st DCA 1981).
Based on the foregoing Findings Of Fact and Conclusions Of Law, it is recommended that respondent Department of Highway Safety and Motor Vehicles enter a final order granting the application of petitioner Naughton Chrysler- Plymouth and Dodge, Inc., for a motor vehicle dealer license.
RECOMMENDED this 18th day of September, 1985, in Tallahassee, Florida.
J. LAWRENCE JOHNSTON Hearing Officer
Filed with the Clerk of the Division of Administrative Hearings this 18th day of September, 1985.
1/ Petitioner Chrysler Corporation and respondents Brandon Chrysler-Plymouth, Inc., and Lakeland Chrysler-Plymouth, Inc., have submitted proposed findings of fact. These Findings Of Fact attempt to rule, either directly or indirectly, on each proposed finding of fact. Proposed findings of fact which were approved and adopted are reflected in the following Findings Of Fact. Where proposed findings of fact are not reflected and no direct ruling rejecting them is apparent, the proposed findings of fact have been rejected as being subordinate,
cumulative, immaterial or unnecessary. Many of the proposed findings of fact, many of the issues presented by the parties, and much of the testimony and evidence presented have become unnecessary in light of the Findings Of Fact and Conclusions Of Law made in this Recommended Order.
Leonard R. Mellon Executive Director
Allan M. Huss, Esquire Chrysler Corporation Post Office Box 1919 Detroit, Michigan 48288
J. Philip Plyler, Esquire Hill, Hill & Dickerson, P.A. 3020 First Florida Tower Tampa, Florida 33601
Michael A. Fogarty, Esquire Post Office Box 3333
Harley E. Riedel, Esquire Post Office Drawer 2802 Tampa, Florida 33601
Judson M. Chapman Assistant General Counsel Division of Motor Vehicles Department of Highway
