Ervin Equipment Inc. v. Wabash National Corp.

187 F. Supp. 3d 968, 2016 U.S. Dist. LEXIS 64608, 2016 WL 2892132
CourtDistrict Court, N.D. Indiana
DecidedMay 17, 2016
DocketCAUSE NO. 4:15-CV-104-PPS-PRC
StatusPublished

This text of 187 F. Supp. 3d 968 (Ervin Equipment Inc. v. Wabash National Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. Indiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ervin Equipment Inc. v. Wabash National Corp., 187 F. Supp. 3d 968, 2016 U.S. Dist. LEXIS 64608, 2016 WL 2892132 (N.D. Ind. 2016).

Opinion

OPINION AND ORDER

PHILIP P. SIMON, CHIEF JUDGE

This case is about the attempted termination of a dealership agreement between a manufacturer of semitrailers, Wabash National Corporation, and Ervin Equipment, Inc., one of Wabash’s dealers. The parties entered into a Dealership Agreement in June 2011 giving Ervin the right to buy for resale a specific type of Wabash semitrailers and prohibiting Ervin from selling any competing products without the written consent of Wabash. Ervin’s territory—their “Area of Responsibility” in the parlance of the Dealership Agreement— included a number of counties in Texas as well as all of Mexico. Despite several years of what Ervin describes as a relatively fruitful relationship, Wabash notified Er-vin on July 1, 2015 that, pursuant to the termination- provisions in the Dealership Agreement, it would be terminating the Agreement on December 31, 2015. Ervin believes that Wabash’s termination of the Dealership Agreement is without good cause and sufficient notice and, therefore, a violation of Indiana law.

Ervin filed this action invoking the diversity jurisdiction of the Court. It alleges violations of the Indiana unfair practices statute under Title 9 of the Indiana Code governing motor vehicles and the Indiana Franchise Act (Title 23) and breach of the Dealership Agreement. Ervin requests monetary damages and both a preliminary injunction enjoining Wabash from terminating the Dealership Agreement while this action is pending and a permanent injunction enjoining Wabash from terminating the Dealership Agreement without good cause. The day after Ervin moved for a preliminary injunction, Wabash filed a motion to dismiss the amended complaint for failure to state a claim. For the following reasons, Ervin’s motion for preliminary injunction will be denied and Wabash’s motion to dismiss will be granted in part and denied in part.

Background

In considering the motion to dismiss, the facts come from the amended complaint which I accept as true for present purposes. Ervin sells and distributes semitrailers throughout the United States and Mexico. [DE 16 at ¶7.] Wabash manufactures semitrailers including “dry vans” and “refrigerated vans,” conducting business across the United States and Mexico. [Id. [972]*972at ¶8.] In June 2011, Ervin entered into a Dealership Agreement with Wabash that gave Ervin the right to buy new Wabash dry vans and refrigerated vans for resale and to use Wabash’s names and marks in doing so. [Id. at ¶9.] The Dealership Agreement appointed Ervin as a Wabash dealer in a specific area of responsibility (“AOR”) that included designated counties in southern Texas and the entire country of Mexico. [Id. at ¶10.] The Dealership Agreement prohibited Ervin from selling any products that competed with those of Wabash without Wabash’s prior written consent and Ervin claims that it gave up its right to sell a Hyundai line of trailers as a result of this provision. [DE 1-1 at ¶2; DE 16 at ¶12.] Ervin has not sold any competing line of trailers in the AOR or elsewhere since 2011. [Id. at ¶13.]

The Dealership Agreement is poorly drafted. It is ambiguous over whether Er-vin was permitted to sell Wabash products outside of its AOR. To be sure, the Agreement does not explicitly say that Ervin cannot sell outside of its AOR. On the other hand, one might reasonably ask what would be the purpose of an AOR unless it restricted the dealer from operating outside of it. Indeed, the Agreement specifically says that Ervin “is hereby appointed a Wabash National dealer of specified Wabash National products in the area of responsibility.” [DE 1-1 at 1.] The area of responsibility (parts of Texas and all of Mexico) is set forth in Exhibit B of the Agreement. The Agreement doesn’t say that Ervin has carte blanche to sell anywhere it wants. So we are left with an agreement that specifically provides Ervin a territory but doesn’t say one way or the other whether Ervin is limited to operating within that territory.

The initial term of the Dealership Agreement ran from July 1, 2011 to December 31, 2012. [DE 1-1 at 8.] The Dealership Agreement provided that:

The term shall be renewable annually thereafter by written agreement of the parties. In the event no written agreement of renewal is signed by the parties, this Agreement shall remain in effect on a month to month basis until this Agreement is terminated pursuant to the termination provisions herein, whichever first occurs. No cause shall be necessary for such non-renewal.

[Id.] Paragraph 19 of the Dealership Agreement describes the parties’ rights to terminate. It states:

Unless otherwise provided by applicable law, and unless otherwise provided in this Agreement, this Agreement may be terminated upon thirty (30) days written notice by Dealer or Wabash National.

[Id. at 1119.] In addition, it lists 12 circumstances in which Wabash may immediately terminate the Dealership Agreement upon written notice to Ervin, including failure by Ervin to pay any sums due to Wabash within ten days after demand, failure by Ervin for a period of fifteen days after written notice to perform any obligation under the Dealership Agreement, and Er-vin’s failure to perform as defined in certain enumerated paragraphs of the Dealership Agreement, including the paragraph that set out Ervin’s AOR. [Id.]

Ervin alleges that it fully performed its obligations under the Dealership Agreement. [Id. at ¶20.] Ervin has physical locations in Illinois, Indiana, and Texas at which it either stores or sells Wabash products. [Id. at ¶21.] It alleges that between June 2011 and June 30, 2015 it sold a total of 6,291 Wabash trailers, 2,813 (44.71%) of which were sold in the AOR and 3,478 (55.3%) of which were sold to customers outside of the AOR. [Id. at ¶22.] Many of the trailers sold outside of the AOR were sold directly to other Wabash dealers. [Id. at ¶23.] Upon information and belief, Ervin claims that Wabash eventual[973]*973ly received complaints from other Wabash dealers regarding Ervin’s sale of Wabash products in those dealers’ AORs. Ervin claims that Wabash never told Ervin that it could not sell Wabash trailers to customers outside of its AOR and that Wabash knew that Ervin was doing so and even approved Ervin’s requests on several occasions to quote customers outside its AOR on custom-built orders. [Id. at ¶29.] Ervin further alleges that Wabash only occasionally asked Ervin not to make a specific sale because another dealer was complaining about it. [Id.]

On July 1, 2015, Wabash’s Director of Van Sales, Todd Chrzan, sent a letter to Ervin’s President, Greg Ervin, announcing Wabash’s intention to terminate the Dealership Agreement. The letter is not a model of clarity. It states that Chrzan was following up with Ervin about their recent call to discuss “Ervin’s coverage of its territory as a dealer for the Wabash National brand and the timeliness of paying invoices,” noting that per the “2011 Dealer Agreement in Exhibit A, our dealership relationship is currently month-to-month.. .[and] Ervin or Wabash National may terminate our Dealership Agreement upon thirty (30) days written notice.” [DE 16-2:] The letter went on to state that it “is written notice that our Dealer Agreement shall terminate- on December 31, 2015 ” and that “[u]pon such termination on December 31, Dealer shall make final payment for all outstanding orders...

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Cite This Page — Counsel Stack

Bluebook (online)
187 F. Supp. 3d 968, 2016 U.S. Dist. LEXIS 64608, 2016 WL 2892132, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ervin-equipment-inc-v-wabash-national-corp-innd-2016.