Clair v. Mercedes

CourtCourt of Appeals for the First Circuit
DecidedSeptember 9, 1997
Docket96-1398
StatusPublished

This text of Clair v. Mercedes (Clair v. Mercedes) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Clair v. Mercedes, (1st Cir. 1997).

Opinion

USCA1 Opinion



UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT

No. 96-1398

CLAIR INTERNATIONAL, INC.
AND FOREIGN MOTORS WEST, INC.,

Plaintiffs, Appellants,

v.

MERCEDES-BENZ OF NORTH AMERICA, INC.,

Defendant, Appellee.

____________________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge] ___________________

____________________

Before

Selya, Circuit Judge, _____________

Aldrich and Cyr, Senior Circuit Judges, _____________________

____________________

Richard B. McNamara, with whom Gregory A. Holmes and Stephanie A. ___________________ _________________ ____________
Bray were on brief for appellants. ____
Mark P. Szpak, with whom Peter K. Levitt and Ropes & Gray were on _____________ _______________ ____________
brief for appellee.

____________________
September 5, 1997
____________________

CYR, Senior Circuit Judge. Plaintiffs Clair CYR, Senior Circuit Judge. ________________________

International, Inc. and Foreign Motors West, Inc. appeal from a

district court judgment dismissing their respective claims for

breach of contract and violation of Mass. Gen. Laws ch. 93B

against Mercedes-Benz of North America ("MBNA"), the North

American distribution organization for Mercedes-Benz automobiles.

The central controversy concerns whether the restructuring

effected by MBNA among its franchisees in the Greater Boston area

during the mid-1990s breached its dealership agreement with

plaintiffs-appellants. We affirm the district court judgment.

I I

BACKGROUND BACKGROUND __________

During the early 1990s, MBNA was represented by two

dealerships in the North Shore area of Greater Boston: Auto

Engineering, Inc. ("Auto Engineering"), located in Burlington,

and Gauthier Motors, Inc. ("Gauthier"), located in Salem. Auto

Engineering closed in April 1993,1 leaving Gauthier as the only

MBNA presence on the North Shore. Gauthier, among the older

Mercedes-Benz dealerships in the United States, operated from

what MBNA considered an inadequate facility, a small, outmoded

dealership located in downtown Salem. In early 1993, MBNA

approved a plan for relocating the Gauthier dealership to Route
____________________

1Auto Engineering relocated its dealership without MBNA
authorization on November 2, 1992. See McLane v. Mercedes-Benz ___ ______ _____________
of North America, Inc., 3 F.3d 522, 523 (1st Cir. 1993). As a _______________________
result, Mercedes gave notice of termination. Auto Engineering
then obtained a temporary injunction prohibiting termination
until April 11, 1993, at which time the injunction expired. See ___
id. at 523-24. See infra p. 9. ___ ___ _____

2

128, which would enable it to service the entire North Shore

area. Whereupon, Gauthier began its search for an outside

investor to finance its relocation plan.

Unable to secure a suitable investor, in October 1994

Gauthier decided to sell its dealership outright to Michael

Cantanucci, an experienced automobile dealer who already owned

more than twenty non-MBNA franchises. In due course, Cantanucci

obtained a purchase and sale agreement on a parcel of land along

Route 128, as the site of the proposed new, exclusive MBNA

dealership. After completing a routine "due diligence" check,

which took approximately one month, MBNA approved the franchise

transfer to Cantanucci.

The exclusivity provision was important to MBNA, which

faced increased competition from new luxury automobile lines and

planned to shift to larger, exclusive dealerships in order to

meet the challenge. At the time, moreover, MBNA had no exclusive

dealership in the Greater Boston area, and Mercedes-Benz was

developing several new products, at least one of which, a sports

utility vehicle, was to be sold only at exclusive dealerships.

Upon learning of the proposed location for the

Cantanucci dealership, Herb Chambers, a Mercedes-Benz dealer in

Somerville, Massachusetts, protested to MBNA, claiming that the

proposed Route 128 site was too close to his Somerville

dealership. In December 1994, Chambers brought an action against

MBNA to enjoin construction of its proposed Route 128 dealership.

Although the suit was dismissed in April 1995, six months had

3

elapsed during which Cantanucci had not proceeded with

construction of the new dealership facility due to the Chambers

litigation.

Meanwhile, differences were developing between MBNA and

Cantanucci concerning the proposed new dealership, particularly

the timetable for construction, since MBNA had been without

adequate North Shore representation for approximately two years.

Moreover, during the summer of 1995 Cantanucci had agreed to

acquire a Mercedes dealership in Connecticut, which concerned

MBNA for two reasons. First, MBNA had never dealt with

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