Jaguar Land Rover North America, LLC v. Manhattan Imported Cars, Inc. , 477 F. App'x 84 ( 2012 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 11-1217
JAGUAR LAND ROVER NORTH AMERICA, LLC,
Plaintiff - Appellee,
v.
MANHATTAN IMPORTED CARS, INCORPORATED,
Defendant - Appellant.
Appeal from the United States District Court for the District of
Maryland, at Greenbelt. Deborah K. Chasanow, Chief District
Judge. (8:08-cv-01599-DKC)
Argued: March 21, 2012 Decided: April 23, 2012
Before DUNCAN, KEENAN, and DIAZ, Circuit Judges.
Affirmed by unpublished opinion. Judge Keenan wrote the
opinion, in which Judge Duncan and Judge Diaz joined.
ARGUED: Brad D. Weiss, CHARAPP & WEISS, LLP, McLean, Virginia,
for Appellant. John Joseph Sullivan, HOGAN LOVELLS US LLP, New
York, New York, for Appellee. ON BRIEF: Emily D. Barnes,
CHARAPP & WEISS, LLP, McLean, Virginia, for Appellant. Allison
Caplis, HOGAN LOVELLS US LLP, Baltimore, Maryland, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
BARBARA MILANO KEENAN, Circuit Judge:
In this contract dispute, we consider whether the district
court erred in entering summary judgment in favor of an
automobile distributor and franchisor, Jaguar Land Rover North
America, LLC (JLR), against one of its franchisees. The
district court determined, among other things, that JLR properly
suspended certain incentive payments to Manhattan Imported Cars,
Inc. (Manhattan), a Jaguar and Land Rover franchisee, under the
terms of the parties’ agreements.
On appeal, Manhattan contends that the district court erred
in holding that two contracts, signed by the parties two weeks
before their execution of a third contract, were enforceable
despite a general integration clause in the third contract
purporting to cancel and supersede any agreements previously
executed between the parties. Manhattan also asserts that the
district court erred in holding that JLR’s actions did not
violate certain Maryland statutes requiring distributors to act
in “good faith,” and prohibiting them from requiring an existing
dealer to remove another existing franchise from the dealer’s
facilities. Upon our review of these issues, we affirm the
district court’s judgment.
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I.
In 2005, Manhattan owned a Lincoln Mercury automobile
dealership and a Jaguar automobile dealership. Manhattan
operated those dealerships in a single facility in Rockville,
Maryland (the Rockville facility), pursuant to various
agreements that included a Jaguar Dealer agreement and a Jaguar
Performance agreement. In the original Jaguar Performance
agreement between the parties, Jaguar Cars, the distributor of
Jaguar vehicles, set forth improvement and renovation
requirements for the Rockville facility, and consented to
Manhattan’s operation of a “dual” dealership selling both Jaguar
and Lincoln Mercury vehicles.
In 2006, Manhattan had negotiated to acquire a Land Rover
franchise from another dealer. Because Manhattan intended to
operate the Land Rover dealership at its Rockville facility,
Manhattan needed to obtain approval from Jaguar Cars for this
proposed expansion. Also, in order to begin selling vehicles as
a Land Rover dealer, Manhattan was required to obtain the
approval of Land Rover North America, Inc. (Land Rover N.A.),
the distributor of Land Rover vehicles. At that time, Ford
Motor Company owned both Jaguar Cars and Land Rover N.A., and
common personnel (the franchise personnel) handled the franchise
operations for both brands. On April 21, 2006, the franchise
personnel submitted to Manhattan via email an “agreement
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package,” which contained three separate agreements: the Land
Rover Letter of Intent (the letter of intent), the Amendment to
the Jaguar Performance Agreement (the performance agreement),
and the Land Rover Dealer Agreement (Land Rover dealer
agreement). On May 3, 2006, Manhattan signed both the letter
of intent, which contained Land Rover N.A.’s approval of the
anticipated transfer of the Land Rover dealership, and the
performance agreement, which contained Jaguar Cars’ approval to
add the Land Rover dealership to the Rockville facility. Both
documents addressed necessary improvements and renovations to
the Rockville facility.
On May 16, 2006, after completing its purchase of the Land
Rover franchise, Manhattan signed the Land Rover dealer
agreement, in which Land Rover N.A. authorized Manhattan to
operate the new Land Rover dealership. The Land Rover dealer
agreement included a general integration clause, stating that
the document “contains the entire agreement” between the parties
and “cancels, supersedes and annuls any prior contract,
agreement or understanding” between the parties.
After executing the Land Rover dealer agreement, Manhattan
was entitled to participate in the Business Builder Program
operated by Land Rover N.A. That program was substantially
similar to Jaguar Cars’ Business Builder Program, in which
Manhattan already was a participant. Under these Business
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Builder Programs, dealers are awarded a certain percentage of
the Manufacturer’s Suggested Retail Price (MSRP incentive
payments) for each Jaguar or Land Rover vehicle sold, provided
that the dealer has made certain scheduled improvements to its
dealership facility.
At issue in this case is Manhattan’s entitlement to certain
MSRP incentive payments. The facility-related improvements, to
which the MSRP incentive payments are tied, typically are
detailed in a letter of intent or a performance agreement, and
contain a timeline of “project milestones” for the achievement
of an approved facility plan. These approved facility plans
typically include a final “open for business” deadline.
Under the rules of the Business Builder Programs, when a
dealer fails to meet any given project milestone by more than 90
days, and the final “open for business” milestone is unlikely to
be achieved, the project is classified as being “at risk.”
Pursuant to those rules, once a project is categorized as being
“at risk,” that designation “trigger[s] an immediate suspension”
of MSRP incentive payments.
In the present case, the facility plans required by the
Business Builder Programs were included in the letter of intent
and the performance agreement. In those documents, Manhattan
agreed that after purchasing the Land Rover franchise, Manhattan
would make certain renovations to the Rockville facility. To
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assist in achieving this goal, the letter of intent and the
performance agreement included a set of common project
milestones, with a final deadline of January 1, 2008, by which
Manhattan was obligated to be “open for business” as a
“Jaguar/Land Rover Centre.”
Both the letter of intent and the performance agreement
also contained a paragraph entitled “Relocation of Lincoln
Mercury,” in which Manhattan agreed to remove its Lincoln
Mercury operations from the Rockville facility by either January
1, 2008, or, at the latest, by July 1, 2008, depending on the
strength of Land Rover sales. This provision further stated
that Manhattan understood that Land Rover N.A. and Jaguar Cars
would not have entered into this Agreement, but for
[Manhattan’s] commitment to relocate [the] Lincoln
Mercury operations out of the [Rockville] facility.
If [Manhattan] fail[s] to relocate [its] Lincoln
Mercury operations . . . under the terms of this
agreement, [Manhattan] further understand[s] that any
such failure may result in [Manhattan’s] immediate
ineligibility to receive payments under the Business
Builder incentive program . . . .
Ford sold the Land Rover and Jaguar brands in 2008. In
connection with that transaction, Land Rover N.A. was
reorganized and became JLR, the appellee in this case. JLR also
acquired Jaguar Cars. Following these changes, JLR entered into
superseding agreements with Manhattan that incorporated the same
terms and conditions of the earlier agreements between Manhattan
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and Jaguar Cars. The agreements between Manhattan and Land
Rover N.A. remained in effect.
By the time JLR became the distributor for Land Rover and
Jaguar vehicles, Manhattan had completed some facility
renovations, but had complied only with its first project
milestone and had failed to meet several others. The parties
attempted on numerous occasions to negotiate a revised
renovation schedule but were unable to reach an agreement.
In April 2008, JLR notified Manhattan that JLR was
suspending Manhattan’s MSRP incentive payments. Manhattan
responded by letter, threatening legal action and asserting that
any suspension of MSRP incentive payments would violate Maryland
law.
In June 2008, JLR filed an action in the district court,
seeking a declaration that JLR was entitled to withhold from
Manhattan the MSRP incentive payments. Manhattan filed a
counterclaim asserting several causes of action. As relevant to
this appeal, Manhattan asserted that JLR violated Maryland
Transportation Code (Code) § 15-207(d) by requiring Manhattan to
relocate its Lincoln Mercury dealership, and that JLR violated
Code § 15-206.1 by failing to act in good faith.
JLR later filed a motion for summary judgment, which
Manhattan opposed. After considering the pleadings and other
documents filed by the parties, the district court entered
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summary judgment in favor of JLR. * Manhattan timely filed this
appeal.
II.
We review the district court’s award of summary judgment de
novo. S.C. Green Party v. S.C. State Election Comm’n, 612 F.3d
752, 755 (4th Cir. 2010). Under Rule 56(a) of the Federal Rules
of Civil Procedure, summary judgment is appropriate “if the
movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.”
A.
Manhattan first contends that JLR was not permitted to
suspend the MSRP incentive payments based on Manhattan’s failure
to meet the project milestones contained in the letter of intent
and the performance agreement, because those documents were
nullified by the later-executed Land Rover dealer agreement and
the integration clause contained in that agreement. Manhattan
further asserts that because the Land Rover dealer agreement did
*
The district court denied JLR’s motion for summary
judgment on one of Manhattan’s counts in its counterclaim
relating to a dispute over warranty payments. However, the
parties later reached a settlement on the warranty claim and
filed a joint motion to dismiss that claim. The district court
entered an order dismissing the warranty claim with prejudice.
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not contain any facility-improvement requirements, JLR lacked
any basis to suspend the MSRP incentive payments. We disagree
with Manhattan’s arguments.
Because the answer to this question of contract
interpretation is governed by Maryland law, we begin by
reviewing principles relevant to our determination whether the
Land Rover dealer agreement is an integrated contract
representing the final and complete agreement between the
parties. See Shoreham Developers, Inc. v. Randolph Hills, Inc.,
235 A.2d 735, 739 (Md. 1967). Under Maryland law, the presence
of an express integration clause does not automatically resolve
the parties’ actual intention regarding integration. Courts in
Maryland have explained that even the use of an unambiguous
phrase, such as “this contract contains the final and entire
[a]greement between the parties,” is not invariably conclusive,
and application of this type of phrase is a matter that may be
subject to further interpretation. Id.; see Whitney v. Halibut,
Inc., 202 A.2d 629, 634 (Md. 1964).
Integration clauses are more likely to be enforced
literally when the same parties have entered into more than one
agreement addressing the same subject. See Hercules Powder Co.
v. Harry T. Campbell Sons Co., 144 A. 510, 516-17 (Md. 1929).
In such a circumstance, the later-executed agreement annuls any
prior agreements addressing the same subject because the
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agreements conflict and cannot be construed together. See id.However, when separately-executed contracts between the same
parties do not have conflicting provisions and are entered into
as part of a single transaction, those agreements will be
construed together even when they are executed at different
times and do not refer to each other. See Rocks v. Brosius, 217
A.2d 531, 545 (Md. 1966).
In the present case, the terms of the Land Rover dealer
agreement did not contradict, vary, or amend any of the terms in
the letter of intent or the performance agreement. The letter
of intent and the performance agreement, among other things, set
forth requirements for the improvement and renovation of the
Rockville facility after the addition of the Land Rover
dealership, while the Land Rover dealer agreement did not
address this subject. Rather, the Land Rover dealer agreement
addressed the franchisor-franchisee relationship between JLR and
Manhattan, which permitted Manhattan to operate as a Land Rover
dealer.
Additionally, we observe that the three agreements were
submitted to Manhattan as a “package” in a single email
transmission. Although Manhattan executed the letter of intent
and the performance agreement two weeks before executing the
Land Rover dealer agreement, all three agreements were required
to be completed before Manhattan was authorized to begin
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operating the Land Rover dealership at the Rockville facility.
Further, Manhattan was unable to execute the Land Rover dealer
agreement until the purchase of the franchise had been completed
and the previous franchise owner had suspended its operations as
a Land Rover dealer. Thus, although the three agreements were
executed during the course of a two-week period, the parties
treated the agreements as being part of a single transaction.
This conclusion is reinforced by Manhattan’s conduct, which
demonstrated that Manhattan intended that the letter of intent,
the performance agreement, and Land Rover dealer agreement be
construed and enforced together. The record establishes that
despite the general integration clause in the Land Rover dealer
agreement, Manhattan completed the work necessary to meet its
first project milestone and attempted to negotiate an amended
schedule for the remaining milestones contained in the letter of
intent and the performance agreement. These actions show that
Manhattan considered itself bound by the terms of the letter of
intent and the performance agreement.
Based on the content of the three agreements at issue and
on Manhattan’s conduct, we conclude that the integration clause
in the Land Rover dealer agreement did not cancel or supersede
the letter of intent or the performance agreement. Accordingly,
we hold that the district court did not err in concluding that
Manhattan’s failure to comply with the Business Builder Program
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terms permitted JLR to suspend Manhattan’s MSRP incentive
payments, because the parties intended that all three documents
remain in effect and be construed and enforced together.
B.
Manhattan next argues that the district court erred in
awarding summary judgment to JLR on Manhattan’s counterclaim.
According to Manhattan, the record shows that JLR violated two
Code provisions, Section 15-207 and Section 15-206.1.
With regard to Code § 15-207, Manhattan focuses on the
statutory terms “require” and “coerce.” Manhattan contends that
the terms of the letter of intent and the performance agreement
unlawfully “required” or “coerced” Manhattan to relocate the
Lincoln Mercury dealership and to alter the Rockville facility
in a manner that imposed a “substantial financial hardship.”
We examine this statutory language in its relevant context.
Under Maryland law, we review the plain language of the statute,
giving the words their natural and ordinary meaning. Breslin v.
Powell, 26 A.3d 878, 891 (Md. 2011). Pursuant to Code § 15-
207(d), a distributor
may not require or coerce a dealer, by franchise
agreement or otherwise, or as a condition to the
renewal or continuation of a franchise agreement, to:
(1) Exclude from the use of the dealer’s facilities a
dealership for which the dealer has a franchise
agreement to utilize the facilities; or
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(2) Materially change the dealer’s facilities or
method of conducting business if the change would
impose a substantial hardship on the business of the
dealer.
Md. Code, Transp. § 15-207(d).
This statute defines the term “require” as meaning a
distributor’s imposition “upon a dealer a provision not required
by law or previously agreed to by a dealer in a franchise
agreement.” Md. Code, Transp. § 15-207(a)(3). The term
“coerce” is defined in the statute as meaning “to compel or
attempt to compel by threat of harm, breach of contract, or
other adverse consequences.” Md. Code, Transp. § 15-
207(a)(2)(i). Also, under the Code, a “dealer” is defined as a
“person in the business of buying, selling or exchanging
vehicles.” Md. Code, Transp. § 11-111.
Under the plain language of Code § 15-207(d), as the
relevant terms are defined in the Code, a distributor may not
“require” an existing dealer to accept additional or amended
terms to a franchise agreement requiring the dealer to remove
from its facilities another distributor’s vehicles, a practice
commonly known as “de-dualing.” This statute also prohibits a
distributor from requiring an existing dealer to alter the
dealer’s facilities in a manner that would cause the dealer
substantial financial harm. A distributor also may not “coerce”
an existing dealer to agree to terms compelling de-dualing or
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alteration of the dealer’s facilities in a manner that would
cause the dealer substantial harm.
We find no merit in Manhattan’s argument that JLR violated
these statutory provisions, because the provisions were
inapplicable to the parties’ relationship at the time the three
agreements were executed. As the statutory definitions of the
terms “require” and “coerce” plainly illustrate, the conduct
prohibited by Code § 15-207(d) presupposes that there is an
existing franchise agreement between a distributor and dealer
when the prohibited conduct occurs affecting a particular
franchise. Here, however, Manhattan was not yet a Land Rover
dealer when it agreed in the letter of intent to relocate
Manhattan’s Lincoln Mercury dealership and to renovate the
Rockville facility as part of the parties’ comprehensive
agreement to authorize Manhattan as a Land Rover dealer.
Therefore, neither JLR nor Land Rover N.A. had the existing
contractual relationship with Manhattan required by the statute
to render those distributors liable for “requiring” or
“coercing” de-dualing, within the meaning of Code § 15-207(d).
Our analysis is not altered by the fact that at the time
Manhattan entered into the performance agreement, Manhattan had
an existing franchise relationship with Jaguar Cars. The terms
in the performance agreement relating to removal of the Lincoln
Mercury dealership and to renovation of the Rockville facility
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did not address the existing dealership relationship Manhattan
had with Jaguar Cars, but dealt with the different subject of
Manhattan’s anticipated addition of a Land Rover dealership to
its Rockville facility. Neither JLR nor Jaguar Cars required or
compelled Manhattan to accept the contractual provisions of de-
dualing and renovation, which were not imposed on Manhattan as
an existing dealer but were bargained-for terms of the parties’
agreement authorizing Manhattan to operate as a Land Rover
dealer. Thus, Manhattan’s obligation to comply with duties that
it freely assumed by contract cannot constitute “requirement” or
“coercion” within the meaning of the statute. Accordingly, we
hold that the district court correctly concluded that the terms
in the letter of intent and the performance agreement did not
violate Code § 15-207(d).
Manhattan contends, nevertheless, that JLR violated Code §
15-206.1, by not acting in good faith when JLR required removal
of the Lincoln Mercury dealership from the Rockville facility
and suspended the MSRP incentive payments. We conclude that
this argument is not supported in the record.
Under Code § 15-206.1(b), a distributor must act in good
faith in carrying out the provisions of a franchise agreement
and in any conduct governed by the Code. The statute defines
“good faith” as “honesty in fact and the observance of
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reasonable commercial standards of fair dealing in the trade.”
Md. Code, Transp. § 15-206.1(a).
The plain language of the letter of intent and the
performance agreement established Manhattan’s contractual
obligation to remove the Lincoln Mercury dealership from the
Rockville facility at least by July 1, 2008, irrespective
whether the Land Rover dealership had attained a level of
profitability. Further, the letter of intent and the
performance agreement explicitly stated that execution of those
agreements was conditioned on Manhattan’s agreement to relocate
the Lincoln Mercury dealership, and that any failure to do so
could result in suspension of the MSRP incentive payments.
Therefore, JLR did not violate Code § 15-206.1 merely by seeking
to enforce the bargained-for terms of the letter of intent and
the performance agreement.
III.
In conclusion, we hold that the district court correctly
determined that the challenged provisions in the letter of
intent and the performance agreement are enforceable. Under the
rules of the Business Builder Programs, Manhattan’s failure to
comply with the terms in those agreements permitted JLR to
suspend the MSRP incentive payments. Additionally, the district
court correctly concluded that JLR did not violate the Maryland
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statutes at issue by enforcing JLR’s agreements with Manhattan.
Accordingly, we affirm the district court’s award of summary
judgment in favor of JLR.
AFFIRMED
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