Metro Motors v. Nissan Motor Corp.

339 F.3d 746, 2003 WL 21910714
CourtCourt of Appeals for the Eighth Circuit
DecidedAugust 12, 2003
Docket02-1342, 02-1466
StatusPublished
Cited by11 cases

This text of 339 F.3d 746 (Metro Motors v. Nissan Motor Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Metro Motors v. Nissan Motor Corp., 339 F.3d 746, 2003 WL 21910714 (8th Cir. 2003).

Opinions

BYE, Circuit Judge.

This is a dispute between a car dealership and a car manufacturer over the latter’s attempt to enforce an exclusivity provision in the parties’ contract, notwithstanding the disfavor such provisions have under Minnesota’s Motor Vehicle Sale and Distribution Regulations (the Act), Minn. Stat. §§ 80E.01 — 80E.18. Nissan Motor Corporation, the manufacturer, appeals the district court’s2 refusal to order specific performance of the exclusivity provision. Metro Motors, the dealer, cross-appeals the district court’s refusal to hold exclusivity provisions unenforceable as a matter of law in Minnesota, and the denial of Metro’s request for attorney fees. We affirm.

I

In 1996, Metro signed a contract with Nissan to sell Nissan vehicles at a dealership in Inver Grove Heights, Minnesota. The agreement contained an exclusivity provision which prohibited Metro from “conducting] any dealership operations for any other make or line of new or unused vehicles from the Dealership Facilities.” In 1998, Metro breached the exclusivity provision and began servicing and selling new Kia vehicles at its Inver Grove Heights location. In 2000, Nissan tried to persuade Metro to stop selling Kia cars. Nissan asked Metro to sign an amendment to the original contract which would have provided that Metro’s failure to sell only Nissan vehicles at the Inver Grove Heights location would constitute good cause for termination of the agreement.

Shortly thereafter, Metro brought this lawsuit claiming Nissan’s conduct violated two provisions of the Act. The first provision makes it unlawful to require a dealer to “enter into any agreement with the manufacturer or to do any other act prejudicial to the new motor vehicle dealer by threatening to cancel a franchise or any contractual agreement existing between the dealer and the manufacturer.” Minn. Stat. § 80E.12(e). The second prohibits a manufacturer from “during the franchise [749]*749term, us[ing] any written instrument, agreement, or waiver, to attempt to nullify or modify any provision of this chapter.” Minn.Stat. § 80E.135. Metro claimed Nissan’s proposed amendment attempted to nullify that provision of the Act which provides “[t]he fact that the new motor vehicle dealer ... has established another make or line of new motor vehicle in the same dealership facilities as those of the manufacturer [does not] constitute good cause for the termination, cancellation, or nonre-newal of a franchise.” Minn.Stat. § 80E.07, subd. 1(c).

Metro asked the district court to find Nissan in violation of the Act, to declare exclusivity provisions unenforceable in Minnesota, and to award attorney fees under section 80E.17 of the Act. Nissan counterclaimed asking the district court to declare that Metro breached the contract by selling Kia vehicles at the Inver Grove Heights location, and requesting specific performance (i.e., a court order requiring Metro to stop selling Kia vehicles).

On Metro’s claims, the district court found Nissan in violation of the Act but refused to declare exclusivity provisions unenforceable in Minnesota. The district court also refused to award Metro attorney fees because Metro knowingly breached the contract’s exclusivity provision. On Nissan’s counterclaims, the district court declared Metro breached the contract, but refused to order Metro to stop selling Kia vehicles. The district court determined Nissan was not entitled to the equitable remedy of specific performance because Nissan had control over the terms of the franchise agreement and gave itself no effective means of enforcing the agreement’s exclusivity provision.

Nissan appealed contending the district court misinterpreted the Act and abused its discretion by denying specific performance. Metro cross-appealed contending the district court should have declared exclusivity provisions unenforceable as a matter of law. Metro also contends the district court should have awarded it attorney fees based on Nissan’s violation of the Act.

II

We first address Nissan’s appeal and its claim the district court misinterpreted the Act in denying Nissan’s request for specific performance. We review de novo the district court’s interpretation of the Act, Walk v. Starkey Mach., Inc., 180 F.3d 937, 939 (8th Cir.1999), but review for abuse of discretion the district court’s refusal to grant Nissan the equitable remedy of specific performance. Walser v. Toyota Motor Sales, U.S.A, Inc., 43 F.3d 396, 403 (8th Cir.1994). Specifically, Nissan contends the district court denied specific performance based on a flawed interpretation of Minn.Stat. § 80E.07, subd. 1(c). Nissan claims the district court interpreted that section of the Act as foreclosing, as a matter of law, the equitable remedy of specific performance for the breach of an exclusivity provision. We disagree.

In its treatment of Nissan’s request for specific performance, the district court expressly rejected Metro’s argument that § 80E.07 foreclosed the equitable remedy of specific performance as a matter of law. The district court held § 80E.07 subd. 1(c) “does not prohibit exclusivity terms in franchise agreements, it merely provides that the breach of such terms is not by itself good cause for termination of a franchise.” Metro Motors, LLC v. Nissan Motor Corp., No. Civ. 00-2120, 2001 WL 1690060, at *3 (D.Minn. Dec.27, 2001) (emphasis in original). The district court then noted the Act strongly disfavors exclusivity provisions and makes them difficult to enforce. Id. Those are all correct observations.

[750]*750The district court’s next step unequivocally belies Nissan’s contention the district court erroneously believed specific performance was foreclosed as a matter of law. Citing Dakota County HRA v. Blackwell, 602 N.W.2d 243, 244 (Minn.1999), the district court recognized its obligation to balance the equities present in this case to determine if specific performance was appropriate, and went on to balance those equities. Metro Motors, 2001 WL 1690060 at *3. If the district court had believed the Act foreclosed specific performance as a matter of law, it would not have balanced the equities of the case. The district court clearly understood it had discretion to order specific performance, and appropriately balanced the equities in deciding whether to award an equitable remedy.

We conclude the district court was within its discretion in refusing to grant Nissan an equitable remedy. In balancing the equities, the district court emphasized Nissan’s control, as the drafter, over the terms of the franchise agreement. The district court noted Nissan could have included in the agreement an effective means of enforcing the exclusivity provision, such as a “liquidated damages [clause] or some other legally permissible penalty for the breach of such provision.” Id. The district court concluded “Nissan could have ensured that its Minnesota franchisees had an incentive to comply with the exclusivity provision in Nissan’s franchise agreement. Its failure to do so does not give rise to the equitable remedy of specific performance.” Id.

Thus, the district court refused to help Nissan because Nissan could have helped itself and did not.

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Bluebook (online)
339 F.3d 746, 2003 WL 21910714, Counsel Stack Legal Research, https://law.counselstack.com/opinion/metro-motors-v-nissan-motor-corp-ca8-2003.