Astleford Equipment Co. v. Navistar International Transportation Corp.

632 N.W.2d 182, 2001 Minn. LEXIS 416, 2001 WL 872778
CourtSupreme Court of Minnesota
DecidedJuly 19, 2001
DocketC5-99-1612
StatusPublished
Cited by21 cases

This text of 632 N.W.2d 182 (Astleford Equipment Co. v. Navistar International Transportation Corp.) is published on Counsel Stack Legal Research, covering Supreme Court of Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Astleford Equipment Co. v. Navistar International Transportation Corp., 632 N.W.2d 182, 2001 Minn. LEXIS 416, 2001 WL 872778 (Mich. 2001).

Opinion

OPINION

PAUL H. ANDERSON, Justice.

Astleford Equipment Co., an International truck dealership, brought an action in Hennepin County District Court against Navistar International Transportation Corp., the manufacturer of International trucks.- Astleford alleged that Navistar violated Minnesota’s Heavy and Utility Equipment Manufacturers and Dealers Act (HUEMDA) when it approved another International truck dealership within 10 miles of Astleford’s Burnsville, Minnesota dealership. HUEMDA provides in rele *184 vant part that no equipment manufacturer “may terminate, cancel, fail to renew, or substantially change the competitive circumstances of a dealership agreement without good cause.” Minn.Stat. § 325E.0681, subd. 1. Astleford alleged that Navistar violated the statute by substantially changing the competitive circumstances of its dealership agreement when it approved the other dealership as an International truck dealership. The district court found in favor of Navistar and the court of appeals affirmed. We affirm in part, reverse in part, and remand to the district court.

Astleford was established in 1945 as a dealer of farm implements manufactured by International Harvester Corporation. It was located in Richfield until 1985 when it moved to its current location in Burns-ville. Since the 1960s, Astleford has been a dealer of the International brand of commercial trucks. Navistar is the successor in interest to the truck division of International Harvester Corporation. Astleford currently sells new medium-duty International trucks, Isuzu trucks, used trucks, and it sells parts and provides service for all types of trucks.

At one time, there were a number of International truck dealerships in the Minneapolis/St. Paul metropolitan area. However, after a significant downturn in the commercial truck industry, several International truck dealerships went out of business. Astleford’s Burnsville dealership and Navistar’s company-owned dealership in Minneapolis were two of the only three International dealerships to survive in this area. Astleford’s survival was due in large part to its ability to maintain profitability in its parts and service sales. In. 1982, Navistar sold its Minneapolis dealership to North Star International Trucks, Inc. (North Star International), which is owned and operated by Michael Gleeson, a former Navistar regional manager of dealer operations. Since 1982, As-tleford and North Star International have been intrabrand competitors.

In 1988, Navistar attempted to terminate Astleford’s dealership contract. At the time, Astleford was authorized to sell parts and do warranty service for all International trucks, and it was authorized to sell both heavy-duty and medium-duty International trucks. The dealership contract also assigned Astleford an area of responsibility in which Astleford was expected to maintain a certain level of sales, but there was no agreement as to exclusivity'within or without the area of responsibility. In response to Navistar’s efforts to terminate the dealership contract, Astle-ford sued Navistar for breach of contract. The 1988 case settled in 1990. As part of the settlement agreement, Astleford’s dealership contract was revised, and Astle-ford gave up its right to sell heavy-duty International trucks. Following the contract revision, the only International trucks Astleford was authorized to sell were medium-duty trucks. However, As-tleford could still service heavy-duty trucks, and this type of service made up approximately 40% of its service business.

Beginning in 1996, Gleeson attempted to acquire Astleford. When those efforts failed, Gleeson acquired a truck repair and rental facility in Eagan, which was within 10 miles of Astleford. Gleeson then established North Star Fleet at this location and applied to Navistar for approval of North Star Fleet as an International truck dealership. Because North Star Fleet is located within 10 miles of Astleford and would be in direct competition with Astleford, Navistar was concerned about violating Minn.Stat. § 80E.14 (2000) of the Motor Vehicle Sale and Distribution Act (MVSDA). The MVSDA provides in relevant part that if a manufacturer intends to *185 introduce a new motor vehicle dealership into a relevant market area (defined as 10 miles) where the “fine make” is already represented, the manufacturer must provide notice, and if the location of the proposed dealership is challenged by the existing dealership, there must be a judicial determination of good cause for establishing the new dealership. MinmStat. § 80E.14. As a result, Navistar intended to approve North Star Fleet only as a heavy-duty International truck dealership. Shortly thereafter, Navistar notified Astle-ford of its intention to approve the nearby North Star Fleet dealership.

After receiving the notice, Astleford brought an action against Navistar in Hen-nepin County District Court for violating the MVSDA and HUEMDA and for breach of an implied covenant of good faith and fair dealing. Upon commencement of this action, Navistar suspended approval of its dealership contract with North Star Fleet pending resolution of the action. Before trial, the court dismissed Astle-ford’s claim regarding breach of an implied covenant of good faith. The parties stipulated that good cause under HUEMDA was not an issue in the case. The MVSDA and HUEMDA claims were then tried before the court without a jury.

At trial, an expert witness for Astleford presented an extensive analysis of the detrimental financial effect another International dealership located in such close proximity could have on Astleford. The expert testified that proximity is a significant factor in determining where a customer takes repair work. He then defined a dealership’s relevant market area to be the 12-mile radius around that dealership because 12 miles is the distance that truck owners are generally willing to travel for repair work. The expert then testified that the total geographic area covered by Gleeson’s two dealerships increases by only 15% with the addition of North Star Fleet. At the same time, the area in which North Star and North Star Fleet’s relevant.market areas overlap with Astle-ford’s relevant market area more than doubles with the addition of North Star Fleet.

. Sandra Dawson, Astleford’s owner and president, testified that her main concern regarding the new dealership was that much of Astleford’s parts and service business would be lost if the new dealership were permitted. Dawson claimed that parts and service accounted for the largest portion of Astleford’s profits. To support this claim, Astleford’s expert presented evidence that in 1996 and 1997, 95.7% of Astleford’s net profits were from the parts, service, and paint and body shop departments. Dawson also asserted that Astle-ford could maintain a competitive advantage over a new dealership such as North Star Fleet only because it provides parts and service that are covered by an International warranty. Astleford’s expert testified that during the 6 months before trial, approximately 93% of Astleford’s gross profits from parts and service was from “International related” business. However, there was. not any evidence . of the portion of that work that was actual International warranty work.

Astleford’s expert testified that during the 6 months before trial, 38.3% of Astle-ford’s gross profits from all parts and service business came from customers in a geographic area closer to North Star Fleet than Astleford.

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Cite This Page — Counsel Stack

Bluebook (online)
632 N.W.2d 182, 2001 Minn. LEXIS 416, 2001 WL 872778, Counsel Stack Legal Research, https://law.counselstack.com/opinion/astleford-equipment-co-v-navistar-international-transportation-corp-minn-2001.