Darling's Hyundai v. Hyundai Motor America

CourtSuperior Court of Maine
DecidedJanuary 20, 2015
DocketKENap-14-1thru3
StatusUnpublished

This text of Darling's Hyundai v. Hyundai Motor America (Darling's Hyundai v. Hyundai Motor America) is published on Counsel Stack Legal Research, covering Superior Court of Maine primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Darling's Hyundai v. Hyundai Motor America, (Me. Super. Ct. 2015).

Opinion

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STATE OF MAINE SUPERIOR COURT KENNEBEC, SS. CIVIL ACTION DOCKET NO. AP-14-1 DOCKET NO. AP-14-2 DOCKET NO. AP-14-3 VIM~- rtN- Vl-JD-{5 ) DARLING'S HYUNDAI, ) ) Plaintiff - Appellee, ) ORDER ) v. ) ) HYUNDAI MOTOR AMERICA, ) ) Defendant-Appellant. )

Defendant/Appellant Hyundai Motor America ("Hyundai") appeals the District

Court's small claims opinion in Docket Nos. SC-2013-0287, SC-2013-0289, and SC-

2013-0290 (collectively, the Small Claims Judgment) pursuant to M.R. Civ. P. 76D. The

Small Claims Judgment held that Darling's was entitled to a 94% markup under 10

M.R.S.A. § 1176 ("section 1176") on remanufactured radio, rear seat entertainment

("RSE"), and Navigation units (collectively, the "remanufactured units") installed under

warranties on Hyundai vehicles. Hyundai argues it is not required to pay Darling's the

94% markup because Darling's did not "provide" the remanufactured units under the

meaning of section 1176. Darling's argues the District Court properly found Hyundai

was required to pay the markup because, from the perspective of the vehicle owner,

Hyundai does "provide" the remanufactured units.

For the reasons discussed below, the court denies Hyundai's M.R. Civ. P. 76D

appeal.

1 I. Background

Darling's is an automobile dealer/franchisee ofHyundai, the

manufacturer/franchisor. Darling's is contractually required to perform warranty repairs

on Hyundai vehicles at no cost to the customer. Darling's filed four small claims actions

in the Augusta District Court in May of2013 regarding warranty repairs. The District

Court ruled in favor of Darling's and Hyundai appealed the judgment on three of the four

claims.

In the three claims at issue, Darling's performed repairs on Hyundai vehicles

covered by Hyundai' s express warranty at no charge to the customers. Pursuant to the

parties' agreement, as embodied by the 2013 Hyundai Warranty Policy and Procedure's

Manual ("Warranty Manual"), Hyundai reimburses Darling's for labor costs and for the

Hyundai parts used in warranty repairs.

Section 5.1 ofthe Warranty Manual provides that Hyundai will reimburse

Darling's for the costs of the parts by paying the dealer net price plus an additional parts

handling allowance based on the dealer net price. Hyundai utilizes a 40% markup on the

dealer net price as the "parts handling allowance" for nearly all of its dealers in the

country. Maine dealers, however, are afforded a different parts handling allowance per

Maine law. Specifically, section 1176 requires the manufacturer to reimburse the dealer

for any parts provided at "the retail rate customarily charged by that [dealer] for the same

parts when not provided in satisfaction of a warranty ... " 10 M.R.S.A. § 1176. The

"retail rate" is the price that a dealer would "customarily" charge a nonwarranty customer

for that same part. See Darling's v. Ford Motor Co., 1998 ME 232, ~ 18, 719 A.2d 111

2 (hereinafter "Ford Motor Co. 1998"). 1 Here, the parties stipulated that the "retail rate,"

or the average percentage markup, to be applied to all parts used by Darling's in warranty

repairs is 94%. Accordingly, each time Darling's performs a warranty repair, it receives

a reimbursement including both the dealer net price and the 94% markup from Hyundai.

In the three cases at issue, Darling's performed repairs in which the

remanufactured units were installed under warranty. The repairs at issue are governed by

section 5.6 of the Warranty Manual, which explains that, unlike most other parts,

Darling's is not required to keep a supply of new radio, RSE, or navigation units.

Instead, Darling's must replace these defective parts with the remanufactured units that

are stocked by a parts distribution center. When Darling's orders and receives a

remanufactured unit, Hyundai invoices Darling's for the remanufactured dealer net price.

After Darling's installs the remanufactured unit, it must mail the defective unit back to

Hyundai to receive a credit in an amount equal to the price for which it was invoiced.

The question at issue is whether Section 1176 requires Hyundai to pay the 94%

markup in addition to the dealer net price for the remanufactured units.

A. Summary of the Small Claims Judgment

The District Court determined that Hyundai was required to pay Darling's the

94% markup on the remanufactured units. Small Claims Judgment, 2-4. It explained that

while Darling's is not permitted to stock new radio, RSE, or navigation systems for

warranty repairs, Hyundai does require Darling's to perform those warranty repairs using

remanufactured parts. !d. at 3. From this, the District Court explained that viewed from

1 Section 1176 offers further details regarding how this rate is determined that are

not pertinent to resolving the present dispute.

3 the vehicle owner's perspective, Darling's has "provided" the remanufactured unit as part

of the warranty process. !d.

Furthermore, the District Court explained that the Law Court rejected a

construction of section 1176 similar to the one proffered by Hyundai in Ford Motor Co.

1998. In that case, the manufacturer argued that section 1176 did not cover, and that

markup payments were not owed for, "sublet repairs," i.e. repairs that "occur when the

dealer must make a repair, but cannot provide the specialized labor or materials required

to make the repair." !d. (quoting Ford Motor Co. 1998, 1998 ME 232, ~ 20,219 A.2d

111). The dealer must instead hire a subcontractor to make the repair. !d. The Law

Court rejected the manufacturer's argument that the dealer was not "providing" the labor

or parts involved in the sublet repairs as the term is used in section 1176 explaining:

We determine that section 1176 includes reimbursement for sublet repairs. The statute governs reimbursement of all repairs in which a manufacturer "requires or permits a motor vehicle franchisee to perform labor or provide parts in satisfaction of a warranty ... " 10 M.R.S.A. § 117 (1997). Since section 1176 applies to all warranty repairs, it applies to warranty repairs accepted by dealers who lack the ability to make all repairs on their premises, as well as to the dealers who have the ability to make all repairs on their premises.

!d. (quoting Ford Motor Co. 1998, 1998 ME 232, ~ 21,219 A.2d 111. Accordingly, the

District Court held that section 1176 applies to warranty repairs involving Hyundai

remanufactured units. Small Claims Judgment, 3.

II. Discussion

Pursuant to M.R. Civ. P. 76D, Hyundai only appeals questions oflaw, specifically

the District Court's interpretation of section 1176. Section 1176 provides, in pertinent

part:

4 If a motor vehicle franchisor requires or permits a motor vehicle franchisee to perform labor or provide parts in satisfaction of a warranty created by the franchisor, the franchisor ... shall reimburse the franchisee for any parts so provided at the retail rate customarily charged by that franchisee for the same parts when not provided in satisfaction of a warranty.

10 M.R.S.A. § 1176 (emphasis added).

Issues of statutory interpretation are reviewed de novo. Ford Motor Co. v.

Darling's, 2014 ME 7, ~ 15, 86 A.3d 35. The primary purpose in statutory interpretation

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Related

Acadia Motors, Inc. v. Ford Motor Co.
44 F.3d 1050 (First Circuit, 1995)
General Motors Corp. v. Darling's
444 F.3d 98 (First Circuit, 2006)
Acadia Motors, Inc. v. Ford Motor Co.
844 F. Supp. 819 (D. Maine, 1994)
Darling's v. Ford Motor Co.
1998 ME 232 (Supreme Judicial Court of Maine, 1998)
Duncan v. United States
219 A.2d 110 (District of Columbia Court of Appeals, 1966)
Ford Motor Company v. Darling's
2014 ME 7 (Supreme Judicial Court of Maine, 2014)
Central Maine Power Company v. Devereux Marine, Inc.
2013 ME 37 (Supreme Judicial Court of Maine, 2013)

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Darling's Hyundai v. Hyundai Motor America, Counsel Stack Legal Research, https://law.counselstack.com/opinion/darlings-hyundai-v-hyundai-motor-america-mesuperct-2015.