2022 IL App (2d) 210785
Ill. App. Ct.2022Background:
- iMotorsports (dealer in Elmhurst, IL) and Vanderhall (manufacturer) entered a written franchise agreement on Feb. 7, 2018, which included a nonexclusive grant but barred Vanderhall from appointing any dealer within 75 miles of iMotorsports (¶2(f)); the Agreement stated it would terminate Oct. 31, 2019 (¶9(f)).
- After Oct. 31, 2019, the parties continued doing business: Vanderhall supplied vehicles, warranty reimbursements, signage, and listed iMotorsports as a dealer; iMotorsports continued to sell and service Vanderhall vehicles (¶4).
- On Feb. 1, 2021, Vanderhall appointed a new dealer in Hickory Hills, ~16 miles from iMotorsports (¶5). iMotorsports demanded Vanderhall cease, Vanderhall refused and delivered vehicles to the new dealer (¶5).
- iMotorsports filed an amended complaint asserting (1) breach of the written contract (enforcement of 75-mile exclusivity), (2) breach of an implied-in-fact contract continuing the 75-mile restriction, and (3) a violation of the Motor Vehicle Franchise Act §4(b) for bad faith/unconscionable action (¶7).
- Vanderhall moved to dismiss under Ill. Code Civ. Proc. §2-615; the trial court granted dismissal with prejudice, reasoning the Agreement expired by its terms, the MVFA notice provision did not apply because defendants did not terminate/refuse to renew, and the Act’s 10-mile statutory exclusivity for populous counties made the 16-mile dealer appointment non-substantial (¶9–¶11, ¶24). The appellate court affirmed (¶37–¶38).
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach of express contract: Can iMotorsports enforce the Agreement’s 75-mile exclusivity when Vanderhall appointed a dealer in 2021 after the Agreement’s Oct. 31, 2019 expiration? | The Agreement’s expiration is unenforceable under MVFA §4(d)(6) because Vanderhall failed to give 60 days’ statutory notice of termination/nonrenewal; severability preserves the 75-mile clause. | The Agreement expired by its terms in 2019; no valid enforceable contract existed in 2021, so no breach. | Dismissed: Agreement expired and plaintiff did not plead a subsequent valid written contract; MVFA notice provision inapplicable because Vanderhall did not cancel/terminate or refuse to renew—parties continued dealing (¶18–¶24, ¶26). |
| Breach of implied-in-fact contract: Did post-expiration conduct create an implied contract preserving the 75-mile exclusivity? | Continued performance and identical course of dealings after expiration implied a renewed contract with the same terms (including 75-mile exclusivity). | No meeting of the minds was alleged; Vanderhall’s appointment of a dealer 16 miles away shows it did not act as if bound to a 75-mile exclusivity. | Dismissed: plaintiff’s allegations are conclusory and fail to show offer/acceptance or mutual intent to revive the 75-mile exclusivity (¶30–¶33). |
| MVFA §4(b) claim: Does Vanderhall’s conduct constitute arbitrary, bad-faith, or unconscionable action under §4(b)? | Authorization of a nearby dealer in bad faith/unconscionably breached the (express or implied) franchise, causing damage. | Without an underlying enforceable contract, there can be no actionable breach or §4(b) violation. | Dismissed: §4(b) claim fails where the contract-based claims fail—no actionable contractual obligation alleged (¶35). |
Key Cases Cited
- Crossroads Ford Truck Sales, Inc. v. Sterling Truck Corp., 2011 IL 111611 (Ill. 2011) (manufacturer must send dealer notice when intending to terminate, not renew, or substantially change/modify franchise under MVFA).
- Cabriolet Porsche Audi, Inc. v. American Honda Motor Co., 773 F.2d 1193 (11th Cir. 1985) (statute addressing notice/nonrenewal applies only where business relationship is actually terminated; continued dealings can imply renewal and avoid notice requirement).
- Nissan N. Am., Inc. v. Jim M'Lady Oldsmobile, Inc., 307 F.3d 601 (7th Cir. 2002) (expired written agreement cannot be the basis for later breach claims absent a new enforceable contract).
- Gallagher Corp. v. Russ, 309 Ill. App. 3d 192 (Ill. App. Ct. 1999) (no breach claim when the contract has expired and no valid contract remains).