Leesburg Imports, L.L.C., t/a Leesburg Honda v. D.B. Smit, Commissioner, and ( 2008 )

COURT OF APPEALS OF VIRGINIA
Present: Judges McClanahan, Petty and Senior Judge Annunziata
Argued at Alexandria, Virginia
LEESBURG IMPORTS, L.L.C., t/a
LEESBURG HONDA
MEMORANDUM OPINION * BY
v. Record No. 1916-07-4 JUDGE ELIZABETH A. McCLANAHAN
JUNE 10, 2008
D.B. SMIT, COMMISSIONER, VIRGINIA
DEPARTMENT OF MOTOR VEHICLES AND
AMERICAN HONDA MOTOR COMPANY, INC.
FROM THE CIRCUIT COURT OF LOUDOUN COUNTY
Thomas D. Horne, Judge
William T. Lehner (Andrew Biondi; S. Vernon Priddy III; Sands
Anderson Marks & Miller, on briefs), for appellant.
Erik K.G. Fiske, Senior Assistant Attorney General (Robert F.
McDonnell, Attorney General, on brief), for appellee D.B. Smit,
Commissioner, Virginia Department of Motor Vehicles.
Steven A. McKelvey, Jr. (Philip B. Morris; Lauren E. Hutcheson;
Nelson Mullins Riley & Scarborough, LLP; Morris & Morris, PC,
on brief), for appellee American Honda Motor Company, Inc.
Leesburg Honda appeals from the trial court’s order upholding the Commissioner’s decision
denying Leesburg Honda a hearing to protest establishment of a new Honda dealership. We affirm
the trial court.
*
Pursuant to Code § 17.1-413, this opinion is not designated for publication.
I. Background
Pursuant to Code § 46.2-1569(4), 1 American Honda advised Leesburg Honda it had
approved the establishment of a new Honda dealership at Stonecraft Center Court in Chantilly.
Leesburg Honda filed a petition of protest with the Commissioner asserting that the proposed
dealership, to be located 14.4 miles from Leesburg Honda, was within Leesburg’s relevant market
area (RMA). 2 Leesburg Honda asserted it had a statutory right to protest the establishment of the
1
Code § 46.2-1569(4) makes it unlawful for an automobile manufacturer
[t]o grant an additional franchise for a particular line-make of motor
vehicle in a relevant market area in which a dealer or dealers in that
line-make are already located unless the franchisor has first advised in
writing all other dealers in the line-make in the relevant market area. No
such additional franchise may be established at the proposed site unless
the Commissioner has determined, if requested by a dealer of the same
line-make in the relevant market area within thirty days after receipt of the
franchisor’s notice of intention to establish the additional franchise, and
after a hearing on the matter, that there is reasonable evidence that after
the grant of the new franchise, the market will support all of the dealers in
that line-make in the relevant market area.
2
“Relevant market area” is defined as follows:
1. In metropolitan localities, the relevant market area shall be a
circular area around an existing franchised dealer with a population of
250,000, not to exceed a radius of 10 miles, but in no case less than
seven miles.
2. If the population in an area within a radius of 10 miles around an
existing franchised dealer is less than 250,000, but the population in an
area within a radius of 15 miles around an existing franchised dealer is
150,000 or more, the relevant market area shall be that area within the
15-mile radius.
3. In all other cases the relevant market area shall be an area within a
radius of 20 miles around an existing franchised dealer or the area of
responsibility defined in the franchise, whichever is greater. In any case
where the franchise agreement is silent as to area of responsibility, the
relevant market area shall be the greater of an area within a radius of 20
miles around an existing franchised dealer or that area in which the
franchisor otherwise requires the franchisee to make significant retail
sales or sales efforts.
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proposed dealership and sought a hearing to determine whether the market would support all of the
Honda dealers in the RMA. Leesburg Honda later supplemented its petition with a population study
conducted by Technical Associates that analyzed the population within a 10-mile and 15-mile
radius of Leesburg Honda. Using Census 2000 population data, the study indicated the population
within a 10-mile radius was 170,671 and the population within a 15-mile radius was 436,797.
Because the population was less than 250,000 within a 10-mile radius and more than 150,000 within
a 15-mile radius, the RMA of Leesburg Honda was 15 miles under the Census 2000 statistics. 3 The
study also indicated that if using the Claritas 2006 Estimated Population,4 the population within 10
miles of Leesburg Honda was 263,275 and the population within 15 miles was 575,357. Since the
population within 10 miles of Leesburg Honda exceeded 250,000, the RMA was between 7 and 10
miles. 5 The study concluded that Leesburg Honda’s RMA should be based “on the more lenient of
the two permissible population sources,” the Census 2000 population.
In determining population for this definition, the most recent census by
the U.S. Bureau of the Census or the most recent population update,
either from the National Planning Data Corporation or other similar
recognized source, shall be accumulated for all census tracts either
wholly or partially within the relevant market area.
Code § 46.2-1500.
3
“If the population in an area within a radius of 10 miles around an existing franchised
dealer is less than 250,000, but the population in an area within a radius of 15 miles around an
existing franchised dealer is 150,000 or more, the relevant market area shall be that area within
the 15-mile radius.” Code § 46.2-1500(2).
4
Claritas is the successor to National Planning Data Corporation and agreed by both
parties to be a recognized source. Neither party disputed the reliability of this source.
5
“In metropolitan localities, the relevant market area shall be a circular area around an
existing franchised dealer with a population of 250,000, not to exceed a radius of 10 miles, but in
no case less than seven miles.” Code § 46.2-1500(1).
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In response to Leesburg Honda’s petition of protest, American Honda asserted that
Leesburg Honda had no standing to protest the establishment of the new dealer since, using the
most recent population data, the RMA for Leesburg Honda was 10 miles and the new dealer
would be located more than 14 miles from Leesburg Honda. American Honda submitted its own
study performed by Urban Science Applications, Inc., which concluded the RMA for Leesburg
Honda was limited to 10 miles based on the dense population around the dealership. By
affidavit, James A. Anderson, president of Urban Science Applications, stated based on the most
recent Claritas update, the 2006 total population of the census tracts wholly or partially within a
circle of 10 miles radius around Leesburg Honda was 288,803. He further stated that even
excluding certain census tracts excluded by Technical Associates, the population still exceeded
250,000. Therefore, Anderson concluded the RMA for Leesburg Honda was a circle with a
10-mile radius.
The Commissioner determined that Leesburg Honda did not have standing to request a
formal evidentiary hearing to protest the establishment of the new dealership. The
Commissioner noted that neither party disputed Claritas was a recognized source for the recent
population update referenced in the statute. Rejecting Leesburg Honda’s argument that it could
choose the population data more “lenient” to its position, the Commissioner decided the 2006
data, presented by both parties, was appropriate to use and gave a more accurate picture of
Leesburg Honda’s RMA. The Commissioner found that the RMA was a 10-mile radius, and
since the proposed dealership would be located at least 14 miles from Leesburg Honda, the
proposed dealership was outside Leesburg Honda’s RMA and Leesburg Honda did not have
standing to protest.
Leesburg Honda filed a motion to reconsider the Commissioner’s decision. In support,
Leesburg Honda submitted an affidavit of Glenn A. Watkins, vice president of Technical
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Associates. In that affidavit, Watkins stated he was an expert on issues involving relevant market
areas and advised the General Assembly on methods of determining population when the legislation
was drafted. He further stated that he recommended the current statutory language regarding use of
either the U.S. Census population or the most recent population update. 6 He concluded that based
on his recommendations to the General Assembly, the more “lenient” of the two sources should be
used. Leesburg Honda argued Watkins’ affidavit represented legislative history that should be
considered by the Commissioner. The Commissioner denied the motion to reconsider. The
Commissioner explained “[o]ther than the recollection of one person who states he had some input
into that legislative process,” Leesburg Honda had “presented no specific legislative history on this
specific statute.” The Commissioner further reasoned “that the best evidence of legislative intent is
the statute itself” and he had “endeavored to follow that statute in this case.”
Leesburg Honda filed a petition for appeal in the trial court. The trial court adopted the
reasoning of the Commissioner finding the decision “well reasoned.”
II. ANALYSIS
“In an appeal to the circuit court from a decision by an agency, the burden is upon the
appealing party to demonstrate error.” Carter v. Gordon, 28 Va. App. 133, 141, 502 S.E.2d 697,
700-01 (1998). Judicial review of an agency decision is limited to determining (1) “whether the
agency acted in accordance with law;” (2) “whether the agency made a procedural error which
was not harmless error;” and (3) “whether the agency had sufficient evidential support for its
findings of fact.” Johnston-Willis, Ltd. v. Kenley, 6 Va. App. 231, 242, 369 S.E.2d 1, 7 (1998).
The review of an agency’s factual findings “is limited to determining whether substantial
6
“In determining population for this definition [of RMA], the most recent census by the
U.S. Bureau of the Census or the most recent population update, either from the National
Planning Data Corporation or other similar recognized source, shall be accumulated for all
census tracts either wholly or partially within the relevant market area.” Code § 46.2-1500.
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evidence in the agency record supports its decision.” Avante at Lynchburg, Inc. v. Teefey, 28
Va. App. 156, 160, 502 S.E.2d 708, 710 (1998). Under this standard, the reviewing “court may
reject the agency’s findings of fact only if, considering the record as a whole, a reasonable mind
would necessarily come to a different conclusion.” Virginia Real Estate Comm’n v. Bias, 226
Va. 264, 269, 308 S.E.2d 123, 125 (1983).
In accordance with familiar principles of appellate review, “we review the facts in the
light most favorable to sustaining the [Commissioner]’s action,” Atkinson v. Virginia Alcohol
Beverage Control Comm’n, 1 Va. App. 172, 176, 336 S.E.2d 527, 530 (1985), and “take due
account of the presumption of official regularity, the experience and specialized competence of
the agency, and the purposes of the basic law under which the agency has acted,” Code
§ 2.2-4027. “[W]hen the appellant challenges a judgment call on a topic on which ‘the agency
has been entrusted with wide discretion by the General Assembly,’ we will overturn the decision
only if it can be fairly characterized as ‘arbitrary or capricious’ and thus a ‘clear abuse of
delegated discretion.’” Citland, Ltd. v. Commonwealth ex rel. Kilgore, 45 Va. App. 268, 275,
610 S.E.2d 321, 324 (2005) (citation omitted).
Under the Motor Vehicle Dealer Franchise Act, Code § 46.2-1500 et seq., the
Commissioner of the Department of Motor Vehicles is directed to “promote the interest of the
retail buyers of motor vehicles and endeavor to prevent unfair methods of competition and unfair
or deceptive acts or practices.” Code § 46.2-1501. When a motor vehicle franchisor intends to
establish an additional franchise, the Commissioner, in carrying out his obligation to promote
fair competition and if requested by a dealer in the RMA, must determine whether “the market
will support all of the dealers in that line-make in the relevant market area.” Code § 46.2-1569.
If the dealer requesting the hearing is not in the same RMA as the proposed new franchise, the
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protesting dealer is not entitled to a hearing. The Commissioner must necessarily determine the
RMA if the parties are disputing the RMA of the existing dealer. 7
We do not agree with Leesburg Honda that the Commissioner disregarded the plain
words of the statute. The statute states that in determining population “the most recent census by
the U.S. Bureau of the Census or the most recent population update, either from the National
Planning Data Corporation or other similar recognized source, shall be accumulated for all
census tracts either wholly or partially within the relevant market area.” Code § 46.2-1500. That
is precisely what the Commissioner did here. The Commissioner accumulated the data from and
considered both sources; and then determined the 2006 data was more accurate than the 2000
data, considering the growth in population in the Northern Virginia area. “[S]ubstantial evidence
in the agency record supports [his] decision,” Avante at Lynchburg, Inc., 28 Va. App. at 160,
502 S.E.2d at 710, and we do not believe “a reasonable mind would necessarily come to a
different conclusion,” Virginia Real Estate Comm’n, 226 Va. at 269, 308 S.E.2d at 125. 8
Leesburg Honda argues the Virginia Motor Vehicle Dealer Franchise Law is remedial in
nature and should be liberally construed to advance the interests of the dealer by providing it
with an opportunity to protest additional dealers of the same line-make in its sales competitive
area. But, while the statute may be remedial in purpose and should be liberally construed,
Provident Life and Acci. Ins. Co. v. Walker, 190 Va. 1016, 1025, 59 S.E.2d 126, 130 (1950), it
7
We reject Leesburg Honda’s argument that the determination of RMA is made twice –
first on the issue of standing and then again at the hearing on the merits. If in dispute, the
Commissioner must determine the RMA of the existing dealer. If the proposed franchise is in
the same RMA as the existing dealer, the dealer is entitled to protest. If not, the statute has no
application. The statute makes no provision for two separate determinations of RMA.
8
Leesburg Honda also argues the Commissioner erred in disregarding legislative history
in the form of the Watkins affidavit. Even if we considered this affidavit to be some evidence of
legislative history, it was unnecessary for the Commissioner to consider it. See Marsh v. City of
Richmond, 234 Va. 4, 11, 360 S.E.2d 163, 167 (1987) (When the words of the statute are plain
and unambiguous we need not resort to rules of statutory construction or legislative history.).
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should not be interpreted in a manner inconsistent with its plain language, City of Richmond v.
Richmond Metro. Auth., 210 Va. 645, 648, 172 S.E.2d 831, 833 (1970). As we state above,
under the plain language of the statute, the population for purposes of RMA is determined by
accumulating “the most recent census by the U.S. Bureau of the Census or the most recent
population update.” Consistent with this directive, the Commissioner considered both sources of
data and found the 2006 data to be the most accurate. Nothing in the statute requires the
Commissioner to choose from these data sources the population figures that would be more
“lenient” or more favorable to the interests of the existing dealer. “To read the statute otherwise
would be to add language to the statute, and we refrain from doing so.” Kitchen v. City of
Newport News, 275 Va. 378, 395, 657 S.E.2d 132, 142 (2008). Neither party disputed the
reliability of the 2006 population data. And the use of outdated population data neither serves
the purpose of the Act in promoting fair competition among motor vehicle dealers nor serves to
promote the interests of retail buyers of motor vehicles. The Commissioner has been entrusted
with wide discretion on issues arising under the Motor Vehicle Dealer Franchise Act, and we do
not view his decision as either “arbitrary or capricious” or that it reflects a “clear abuse of
delegated discretion.” Citland, Ltd., 45 Va. App. at 275, 610 S.E.2d at 324 (internal quotations
and citation omitted).
For the foregoing reasons, we believe the Commissioner “acted in accordance with
law[]” and “had sufficient evidential support for [his] findings of fact.” Johnston-Willis, Ltd., 6
Va. App. at 242, 369 S.E.2d at 7. 9 Accordingly, the trial court did not err in affirming and
adopting the decision of the Commissioner.
Affirmed.
9
Because of our holding in this regard, we need not consider Leesburg Honda’s
argument that the trial court gave undue deference to the Commissioner’s decision.
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