M & D Cycles, Inc. v. American Honda Motor Co. , 70 F. App'x 592 ( 2003 )

Not for Publication in West's Federal Reporter
Citation Limited Pursuant to 1st Cir. Loc. R. 32.3
United States Court of Appeals
For the First Circuit
No. 02-2443
M&D CYCLES,INC.
d/b/a DEPOT HONDA-KAWASAKI,
Plaintiff, Appellant,
v.
AMERICAN HONDA MOTOR CO., INC.,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
[Hon. Joseph A. DiClerico, U.S. District Judge]
Before
Boudin, Chief Judge,
Torruella and Howard, Circuit Judges.
Stephanie A. Bray with whom Richard B. McNamara, Gregory A.
Holmes, and Wiggin & Nourie, P.A., were on brief, for appellant.
Robert D. Cultice with whom Sean T. Carnathan, Benjamin M.
Stern, Hale & Dorr, LLP, James P. Bassett, and Orr & Reno, P.A.
were on brief, for appellee.
July 18, 2003
Per Curiam. In Rochester Lincoln-Mercury v. Ford Motor
Co., 248 F.3d 46 (1st Cir. 2001), we concluded that N.H. Rev. Stat.
Ann. § 357-C:3, I (prohibiting motor vehicle manufacturers from,
inter alia, engaging "in any action which is arbitrary, in bad
faith, or unconscionable and which causes damage to any [motor
vehicle dealer]") does not provide a motor vehicle franchisee a
cause of action against a manufacturer for unfairly denying it an
additional franchise. See id. at 47-48. In reaching this
conclusion, we clarified that the statute protects only the
dealer's existing franchise. Id. (applying Roberts v. Gen. Motors
Corp., 643 A.2d 956, 958-59 (N.H. 1994) and emphasizing that the
statute's enforcement provision, N.H. Rev. Stat. Ann. § 357-
C:12(II), secures the franchisee only in "his business or
property").
Much like the plaintiff in Rochester Lincoln-Mercury,
plaintiff-appellant M&D Cycles, Inc., d/b/a Depot Honda-Kawasaki
("Depot"), a motorcycle dealership franchised by defendant-appellee
American Honda Motor Co., Inc., was aggrieved at American Honda's
course of conduct in establishing a second motorcycle dealership
that Depot's principal, Cynthia Mailloux, had hoped to acquire.
The alleged conduct, which we describe below, included actions and
representations made by American Honda District Sales Manager
William Pugh and American Honda Zone Manager Steven Nicholson.
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Perhaps recognizing the constraints imposed by Rochester
Lincoln-Mercury and Roberts, Depot initiated a state court action
claiming, inter alia, that the conduct in question violated N.H.
Rev. Stat. Ann. § 357-C:3, I because it harmed Depot with respect
to its existing "business or property." American Honda removed the
action to federal court on the basis of diversity jurisdiction and
eventually secured summary judgment. In ruling for Honda on the
statutory claim, the district court concluded that Depot's alleged
reliance upon conduct by Pugh and Nicholson was unjustifiable
because there existed in Depot's franchise agreement with American
Honda a provision stating that only a few, specified American Honda
officers (not including Pugh or Nicholson) were capable of making
promises and commitments that would bind the manufacturer. This
provision, in the court's view, put Depot on notice that it acted
at its own peril in relying upon Pugh or Nicholson. Depot appeals,
framing the issue presented as follows:
May Depot's franchise agreement, which provides that
no employee of American Honda, other than certain senior
officers of the corporation, "may make any promise or
commitment on behalf of American Honda or in any way bind
American Honda" and that "[d]ealer agrees that it will
not rely on any statements or purported statements except
from" these top [American] Honda officers, preclude
Depot's claims under the New Hampshire Dealer Protection
Statute . . . where that Statute specifically forbids a
manufacturer-franchisor from limiting its statutory
liability in its franchise agreements?
Brief for Appellant at vii.
The issue of New Hampshire law that Depot has raised is
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interesting and potentially difficult, but it is not one that we
will decide in this appeal (or certify to the New Hampshire Supreme
Court, as Depot alternatively requests). We are free to affirm on
any ground revealed by the record, e.g., Houlton Citizens'
Coalition v. Town of Houlton, 175 F.3d 178, 184 (1st Cir. 1999),
and here perceive a considerably more straightforward basis for
upholding the district court's judgment. The conduct and
statements of Pugh and Nicholson, when evaluated in an appropriate
factual context, simply cannot give rise to liability under N.H.
Rev. Stat. Ann. § 357-C:3, I even if they were imputed to American
Honda. We briefly explain.
Depot is and since 1994 has been located in the town of
Rye, in Rockingham County, New Hampshire. Depot's agreement with
American Honda gives it a nonexclusive right to buy Honda products
and to advertise itself as a Honda dealer. The agreement also
reserves to American Honda the right to appoint other authorized
Honda dealers wherever it deems appropriate (except as limited by
law). In 1996, Dover Honda, a motorcycle dealership located in the
nearby town of Somersworth, in Strafford County, New Hampshire,
ceased operations. Following Dover Honda's closure, Depot was the
dealer closest to Strafford County. In January 1997, Pugh offered
Mailloux a six-month period for Depot to recoup Dover Honda's sales
and to help American Honda achieve 30% market share in Strafford
County. Depot fell well short of achieving the market share
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American Honda sought within the six-month period or at any time
thereafter.
The conduct underlying Depot's statutory violation claim
began sometime prior to August 1997 (when the six-month
probationary period expired) and continued throughout 1998. As
summarized by Depot, it included (1) Pugh recruiting one Paul
Gladstone, who lacked motorcycle sales experience but employed
Pugh's then-girlfriend, to open a new Strafford County dealership
prior to the expiration of the six-month period during which Depot
was attempting to recoup Dover Honda's sales (and was concomitantly
investing in its facility and inventory to facilitate its efforts);
(2) Pugh informing Mailloux in October 1997 (after sending an
application to Gladstone) that American Honda would be establishing
an "open point," or location for a potential new dealership, in the
Strafford County town of Rochester, New Hampshire, but assuring
Mailloux that the open point would not be filled at that time and
that he would speak to her and permit her to apply before awarding
the dealership to another; (3) American Honda (apparently acting at
the behest of Pugh) sending a second application for the Rochester
open point to one Miles Cook, a friend of Pugh's, in February 1998
without informing Mailloux; (4) American Honda (again, apparently
acting at the behest of Pugh) tentatively approving Cook's
application in June 1998 (and subsequently extending deadlines by
which he was to complete construction of the dealership until
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February 1, 1999) without informing Mailloux; (5) Pugh and
Nicholson refusing to allow Mailloux to apply for the dealership
after she learned in December 1998 that the Rochester open point
was in the process of being filled by Cook; and (6) Pugh and
Nicholson conjuring an untruthful excuse for deterring Mailloux's
application -- that American Honda had a policy on not allowing a
single dealer to have two contiguous markets. See Brief for
Appellant at 18-19.
While these allegations, which we credit for summary
judgment purposes, certainly do not reflect well on Pugh and
Nicholson, we are at a loss to see how they describe "action which
[was] arbitrary, in bad faith, or unconscionable and which cause[d]
damage to [Depot] . . . ." N.H. Rev. Stat. Ann. § 357-C:12, I
(emphasis supplied). Depot's submissions have been extraordinarily
vague on damage and causation, but a review of the record suggests
an intention to argue that the challenged conduct harmed the Depot
franchise by causing it to invest in its facility and to grow its
inventory so as to serve the Strafford County market, and/or by
causing it to lose sales to the new Rochester dealership.* Yet no
reasonable fact-finder could fairly link either source of "damage"
to the allegedly unlawful conduct.
*
Rochester Lincoln-Mercury precludes any claim under the
statute for damage arising out of Depot's failure to secure the
Rochester dealership. See 248 F.3d at 47-48.
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Because Depot's franchise agreement is both nonexclusive
and expressly reserves to American Honda the right to appoint
additional dealers wherever it deems appropriate, the harms Depot
suffered in attempting to serve the Strafford County market and in
losing sales to the Rochester dealership cannot be considered to
have been wrongly inflicted by American Honda unless the
manufacturer was somehow bound by an extra-contractual legal
obligation to forswear appointing a dealer to rival Depot in the
Strafford County market. The only such obligation even suggested
by the record was the January 1997 commitment to permit Depot to
service Strafford County without competition from a dealership
replacing Dover Honda. But this commitment extended only through
August 1997, and was explicitly conditioned on Depot helping
American Honda achieve a 30% market share. And as we have
observed, Depot never came close to obtaining the specified market
share. Nor did American Honda establish a competing dealership
until approximately a year and a half after the six-month
probationary period expired. The evidence thus does not allow for
a finding that American Honda breached the commitment it made to
Depot in January 1997.
That leaves only the evidence that Pugh committed to
talking with Mailloux before American Honda awarded the dealership
to another. But this evidence simply cannot support a damage award
under the statute. First, Pugh's commitment was temporally vague
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and arguably not even breached because Mailloux undisputedly
learned of American Honda's plans to fill the Rochester open point
several months before the actual establishment of the Rochester
dealership. Second, the record is bereft of evidence that any
investments in facility and/or inventory made in reliance on Pugh's
post-August 1997 failure to be upfront with Mailloux -- the only of
Depot's two damage theories potentially impacted by Pugh's silence
-- caused Depot economic harm.
Affirmed. Costs to appellee.
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