McLane v. Mercedes-Benz

• Court: Court of Appeals for the First Circuit
• Decided: September 8, 1993
• Docket: 93-1034
• Status: Published

Opinion

USCA1 Opinion

United States Court of Appeals
                            United States Court of Appeals
                                For the First Circuit
                                For the First Circuit
                                 ____________________
        No. 93-1034

                        STEPHEN E. MCLANE, GENERAL PARTNER OF
                        AUTO ENGINEERING LIMITED PARTNERSHIP,
                                Plaintiff, Appellant,

                                          v.

                         MERCEDES-BENZ OF NORTH AMERICA, INC.
                                Defendants, Appellees.

        No. 93-1035

                        STEPHEN E. MCLANE, GENERAL PARTNER OF
                        AUTO ENGINEERING LIMITED PARTNERSHIP,
                                 Plaintiff, Appellee,

                                          v.

                         MERCEDES-BENZ OF NORTH AMERICA, INC.
                                Defendant, Appellant.
                                 ____________________

                    APPEALS FROM THE UNITED STATES DISTRICT COURT
                          FOR THE DISTRICT OF MASSACHUSETTS
                   [Hon. Douglas P. Woodlock, U.S. District Judge]
                                              ___________________
                                 ____________________

                                        Before
                            Cyr and Stahl, Circuit Judges,
                                           ______________
                             and Fuste,* District Judge.
                                         ______________
                                 ____________________
            Alan  Garber, with whom  Clair A.  Carlson, Jr.,  Paul D. Boynton,
            ____________             ______________________   _______________
        and Mason  & Martin,  were on  brief  for Stephen  E. McLane,  General
            _______________
        Partner of Auto Engineering Limited Partnership.
            Mark P. Szpak, with whom Daniel J.  Klau and Ropes & Gray, were on
            _____________            _______________     ____________
        brief for Mercedes-Benz of North America, Inc.
            William N. Berkowitz, with whom Claudia V. Geschwind and  Bingham,
            ____________________            ____________________      ________
        Dana & Gould, were on brief for BMW of North America, Inc.
        ____________
                                 ____________________
                                  September 7, 1993
                                 ____________________
        _____________________
        *Of the District of Puerto Rico, sitting by designation.

STAHL, Circuit Judge.  Appellant Stephen E. McLane,
                             _____________

            General  Partner  of  Auto  Engineering  Limited  Partnership

            ("Auto   Engineering"),   challenges  the   district  court's

            decisions  both   to  deny  his  motion   for  a  preliminary

            injunction against BMW of  North America, Inc. ("BMW-NA") and

            to grant his motion for the same for only ninety days against

            Mercedes-Benz of North America,  Inc. ("MB-NA").  Finding his

            appeal moot, we dismiss  and remand the case to  the district

            court for such further proceedings as may be appropriate.

                                          I.
                                          I.
                                          __

                                      Background
                                      Background
                                      __________

                      In September 1987, a consortium of investors led by

            McLane formed  Auto Engineering for the  purpose of acquiring

            the assets  of Auto Engineering,  Inc. ("AEI").   Among those

            assets were Mercedes-Benz  and BMW  franchises, a  Lexington,

            Massachusetts,  automobile dealership  facility out  of which

            AEI  had   run  those   franchises,  and  real   property  in

            Burlington,  Massachusetts, which was purchased as the future

            location of  the Mercedes-Benz  dealership.  Having  acquired

            AEI's assets,  Auto Engineering,  pursuant to  its dealership

            agreements  with MB-NA,  moved its  Lexington-based Mercedes-

            Benz  dealership  to  the   Burlington  location.    The  BMW

            dealership  remained in  Lexington until  May 17,  1989, when

            BMW-NA  acceded to  Auto  Engineering's request  to move  the

            dealership to the Burlington premises.

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Unfortunately  for  Auto Engineering,  the  move to

            Burlington   coincided  with  the   general  decline  in  the

            Massachusetts and  national economies.   Decreased automobile

            sales coupled with the high overhead costs of the  Burlington

            facility   caused  Auto   Engineering  to   experience  heavy

            financial losses.  According to Auto Engineering, it incurred

            cumulative operating  losses in excess of  $4,000,000 between

            the years of 1988 and 1992.

                      By the middle of 1991, after  having unsuccessfully

            applied  to   an  MB-NA  investment   program  for  financial

            restructuring  assistance,  Auto Engineering  began exploring

            the  possibility  of selling  the  Burlington  location.   In

            November  1991,  Auto Engineering,  without  seeking approval

            from  either franchisor,  entered  into a  purchase and  sale

            agreement with Circuit City Stores, Inc. ("Circuit City") for

            the   Burlington  premises.      Shortly   thereafter,   Auto

            Engineering advised  MB-NA and BMW-NA that  it was proceeding

            with plans to sell  the Burlington property and again  sought

            permission  to  return  both  dealerships  to  the  Lexington

            location.  Each company refused this request.

                      In  September 1992,  Auto Engineering  learned that

            Circuit City,  pursuant to  the purchase and  sale agreement,

            would  require  it  to  vacate  the  Burlington  premises  by

            November 2,  1992.  Accordingly,  on that  date, and  without

            obtaining approval from  either franchisor, Auto  Engineering

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moved both  dealerships back to Lexington.   Considering this

            relocation  a breach of  the express terms  of the dealership

            agreement, BMW-NA  notified Auto Engineering  by letter dated

            November  3,  1992, that  it  was  terminating the  agreement

            effective January  10, 1993.   The following day,  MB-NA sent

            Auto Engineering a similar termination letter.1

                      In  response to  these termination  letters, on  or

            about December 10, 1992, McLane commenced an  action in state

            court seeking  to enjoin  the termination of  the franchises.

            The complaint alleged, inter alia, that  BMW-NA and MB-NA had
                                   _____ ____

            violated Mass.  Gen. L.  ch. 93B,    4(3)(e), by  terminating

            their respective  dealer agreements "without good cause"2 and

            sought injunctive relief, damages, and attorneys' fees.

                      On December  18, 1992, with MB-NA's  assent, BMW-NA

            removed  the action  to federal  court.   Shortly thereafter,

            Auto  Engineering moved  for  a preliminary  injunction.   On

____________________

            1.  Auto Engineering's dealer agreements with BMW-NA and  MB-
            NA contain clauses providing that the dealer must receive the
            written approval of  the manufacturers before  relocating the
            dealership to another site.

            2.  Mass.  Gen. L. ch.  93B,   4(3)(e)  provides in pertinent
            part:

                      It   shall  be  deemed   a  violation  of
                      paragraph  (a) of  section  three  for  a
                      manufacturer, . .  . notwithstanding  any
                      term  or  provision  of  a  franchise  or
                      selling agreement, to cancel or terminate
                      the franchise  or selling agreement  of a
                      motor vehicle dealer without good cause .
                      . . .

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                                          4

January  7, 1993, after a two-day hearing on that motion, the

            district  court denied the motion as to BMW-NA but granted it

            as to  MB-NA for a period  of ninety days, expiring  on April

            11,  1993.3   The court also  denied Auto  Engineering's oral

            request to stay the terminations pending appeal.  On  January

            8, 1993, Auto  Engineering filed  a notice of  appeal and  an

            expedited  motion requesting  that we  stay the  terminations

            pending  appeal.4    On  that  date,  we  stayed  the  BMW-NA

            termination for one week.  Subsequently, on January 15, 1993,

            we  denied Auto  Engineering's emergency  request for  a stay

            pending  appeal.  Accordingly,  by April 11,  1993, both BMW-

            NA's  and MB-NA's  termination of  Auto  Engineering's dealer

            agreements had become effective.

                                         II.
                                         II.
                                         ___

                                      Discussion
                                      Discussion
                                      __________

                      Both BMW-NA  and  MB-NA contend  that, because  the

            events which Auto Engineering sought  to enjoin have in  fact

____________________

            3.  Because MB-NA had not filed its dealer agreement with the
            Attorney General's office as required under Mass. Gen. L. ch.
            93B,    8, the court granted Auto Engineering's motion for an
            injunction  against MB-NA  for a  period lasting  ninety days
            from January 7, 1993, the date of MB-NA's compliance with the
            filing requirement.

            4.  MB-NA filed a cross-appeal and  a motion with this court,
            seeking relief from the portion of the district court's order
            that delayed the effective time of the MB-NA  termination for
            ninety days.  Given that the ninety days have now passed, MB-
            NA concedes that its cross-appeal is moot.

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                                          5

occurred, its appeal from  the district court's order denying

            injunctive relief is moot.  We agree.

                      It is well  settled that an appeal  from the denial

            of  a motion  for a preliminary  injunction is  rendered moot

            when the act  sought to be enjoined has occurred.  See, e.g.,
                                                               ___  ____

            Oakville  Dev. Corp.  v. FDIC,  986 F.2d  611, 613  (1st Cir.
            ____________________     ____

            1993)  ("When, as  will often  happen, the  act sought  to be

            enjoined  actually  transpires, the  court may  thereafter be

            unable to fashion [] meaningful [relief].  In such straitened

            circumstances,  the appeal  becomes  moot.");  Railway  Labor
                                                           ______________

            Executives Ass'n v. Chesapeake W. Ry., 915 F.2d 116, 118 (4th
            ________________    _________________

            Cir. 1990) (similar),  cert. denied, 111 S.  Ct. 1312 (1991);
                                   _____ ______

            Garza  v.  Westergren,  908  F.2d  27,  29  (5th  Cir.  1990)
            _____      __________

            (similar); Gilpin v. American Fed'n  of State, County, & Mun.
                       ______    ________________________________________

            Employees, AFL-CIO, 875 F.2d 1310, 1313 (7th Cir.) (similar),
            __________________

            cert.  denied, 493 U.S. 917  (1989); Seafarers Int'l Union of
            _____  ______                        ________________________

            N.  Am. v. National Marine Servs., Inc., 820 F.2d 148, 151-52
            _______    ____________________________

            (5th  Cir.) (similar),  cert.  denied, 484  U.S. 953  (1987);
                                    _____  ______

            Marilyn T., Inc. v.  Evans, 803 F.2d 1383, 1384-85  (5th Cir.
            ________________     _____

            1986) (similar); In re Sewanee Land, Coal & Cattle, Inc., 735
                             _______________________________________

            F.2d 1294, 1295 (11th Cir. 1984) (similar).

                      Auto Engineering attempts  to circumvent this  rule

            by   reframing   its   request   for  relief   as   one   for

            "reinstatement" of the franchise agreements.  This request is

            not, however, properly before us.  The district court has not

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                                          6

yet ruled on the merits of Auto Engineering's claims, nor has

            it  considered  such  fact-intensive  questions   as  whether

            reinstatement would  be appropriate, or  even possible, under

            the present  circumstances.  To the extent  that the district

            court   has   addressed   the   post-termination   issue   of

            reinstatement at all, it  has done so only in the  context of

            ruling  on  Auto  Engineering's  request  for  a  preliminary

            injunction.  Because the district court has  not yet resolved

            ultimate issues of liability and permanent  equitable relief,

            we decline to address  them prematurely in this interlocutory

            appeal.5    Cf. Marilyn  T.,  803  F.2d  at 1384-85  (finding
                        ___ ___________

            appeal  moot   and  declining   to  order  reinstatement   of

            appellant's   commercial  license   where  the   question  of

            reinstatement would  require the  court to address  issues as

            yet unresolved by the district court).

                      The sole  issue on  appeal is the  district court's

            denial  of  Auto  Engineering's  request  for  an  injunction

            preventing BMW-NA  and  MB-NA  from  terminating  the  dealer

            agreements.   As  both  of those  terminations have  actually

            occurred, the appeal is moot.  Accordingly, we dismiss the
                                                           dismiss
                                                           _______

____________________

            5.  Needless to say, on remand, the district court  will take
            such further  action with respect to  the reinstatement claim
            as it deems appropriate.

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                                          7

appeal  and  remand  the  case for  any  further  appropriate
                         remand
                         ______

            proceedings.6

____________________

            6.  As a general rule, when a case becomes moot on appeal, we
            vacate  the  district  court's  decision and  remand  with  a
            direction  to   dismiss.     See,  e.g.,  United   States  v.
                                         ___   ____   _______________
            Munsingwear,  Inc., 340  U.S.  36, 39  (1950); National  R.R.
            __________________                             ______________
            Passenger  Corp.  v.  International  Ass'n  of  Machinists  &
            ________________      _______________________________________
            Aerospace  Workers, 915 F.2d 43, 48 (1st  Cir. 1990).  In the
            __________________
            case of interlocutory appeals, however, "`the usual  practice
            is  just to dismiss  the appeal  as moot  and not  vacate the
            order appealed from.'" In re  Tax Refund Litigation, 915 F.2d
                                   ____________________________
            58,  59 (2d Cir. 1990) (quoting Gjertsen v. Board of Election
                                            ________    _________________
            Comm'rs,  751 F.2d  199,  202 (7th  Cir.  1984)).   See  also
            _______                                             ___  ____
            Marilyn T., 803 F.2d at 1385 (dismissing appeal and remanding
            __________
            for  further appropriate  proceedings where  district court's
            order  was   "an  interlocutory  order  that   had  lost  its
            effectiveness");   Gaylord   Broadcasting   Co.   v.   Cosmos
                               ____________________________        ______
            Broadcasting  Corp.,  746  F.2d  251,  254  (5th  Cir.  1984)
            ___________________
            (dismissing  appeal  and  remanding  case where  appeal  from
            denial of preliminary injunction moot); 13A Wright, Miller, &
            Cooper, Federal  Practice and  Procedure   3533.10  at 435-36
                    ________________________________
            (1984)  (recommending  dismissal  rather than  vacatur  where
            appeal from interlocutory order is moot).  

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