ERNIE HAIRE FORD, INC., Auto Assets Trust, Mary K. Haire, individually and as trustee of the Ernest B. Haire, Jr., Revocable Trust, Ernest B. Haire, III, Plaintiffs-Appellants, v. FORD MOTOR COMPANY, Defendant-Appellee.
No. 00-14701.
United States Court of Appeals, Eleventh Circuit.
Aug. 8, 2001.
IT IS ORDERED that the above causes shall be reheard by this court en banc. The previous panel‘s opinion is hereby VACATED.
John H. Fleming, Sutherland, Asbill & Brennan, Atlanta, GA, for Defendant-Appellee.
Before BLACK and BARKETT, Circuit Judges, and TIDWELL*, District Judge.
* Honorable G. Ernest Tidwell, U.S. District Judge for the Northern District of Georgia, sitting by designation.
BLACK, Circuit Judge:
Appellee Ford Motor Company distributes its automobiles through a nationwide network of independently-owned dealerships. Appellants Mary Haire and Ernest B. Haire, III (the Haires) are shareholders of Ernie Haire Ford, Inc. (EHF), an automobile dealership located in Tampa, Florida.1 Appellant Auto Assets Trust (Auto Assets) was to serve as a broker in a proposed transaction. Appellants claim Appellee is liable, under Florida law, for its refusal to approve the proposed transaction. The district court granted summary judgment to Appellee. We affirm.
I. BACKGROUND
We set forth the facts in the light most favorable to Appellants. On March 31, 1985, Appellant EHF and Appellee entered in a Ford Sales and Service Agreement (Dealership Agreement), which was amended on January 5, 1994. On September 5, 1996, EHF and Appellee executed a Dealer‘s Facility Supplement (Supplement). The Dealership Agreement and the Supplement contain three provisions pertinent to this case.
First, section 5(b) of the Dealership Agreement states that the dealership location is described in the Supplement, which in turn specifies two addresses on North Florida Avenue in Tampa as the location for EHF‘s dealership. Second, section 5(c) in the Dealership Agreement provides in part:
[EHF] shall not move or substantially modify or change the usage of any of the DEALERSHIP LOCATION or FACILITIES ..., nor shall [EHF] ... directly or indirectly establish or operate in whole or in part any other locations or
facilities ... without the prior written consent of [Appellee]. (emphasis added)
Third, section 9(a) in the Dealership Agreement provides:
[Appellee] reserves the right to determine, from time to time, in its best judgment, the numbers, locations and sizes of authorized dealers necessary for proper and satisfactory sales and service representation ... within and without the DEALER‘S LOCALITY. In making such determinations, [Appellee] from time to time conducts, to the extent deemed adequate by [Appellee] and subject to the ready availability of information, studies of the locality, including such factors as geographic characteristics, consumer shopping habits, competitive representation patterns, [etc.] .... (emphasis added).
Throughout 1997 and 1998, EHF negotiated a transfer of its dealership to CarMax, a non-party. Under the proposed transaction, the Haires would sell their shares in EHF to Auto Assets, which in turn would sell EHF‘s operating assets, including the Dealership Agreement, to CarMax. The proposed transaction also called for the relocation of the dealership from North Florida Avenue to CarMax‘s superstore on Bearss Avenue. The transaction was conditioned on Appellee‘s approval of both the transfer and relocation of the dealership.
In October 1998, EHF requested Appellee‘s approval for the proposed transaction, including the transfer of the dealership to CarMax and the relocation to Bearss Avenue. In December 1998, Appellee disapproved the relocation to Bearss Avenue, and because the transfer was conditioned on the relocation, Appellee also disapproved the transfer to CarMax. Contemporaneously, to ensure the transaction would not be consummated, Appellee filed a verified complaint with Department of Highway Safety and Motor Vehicles (DHSMV) pursuant to
In their lawsuit before the district court, Appellants presented a plethora of evidence about Appellee‘s motive for rejecting the proposed transaction. For instance, as early as the late 1970s or early 1980s, and then again in late 1995 or early 1996, Appellee had suggested that EHF‘s dealership be moved to Bearss Avenue. Nevertheless, in early 1998, Appellee tried to persuade Appellants not to transfer the dealership to CarMax, despite admitting that the Bearss Avenue location had several advantages over the North Florida Avenue location. At an August 1998 meeting, Appellee informed CarMax that it would not approve the transaction even if CarMax offered to operate the dealership at the North Florida Avenue location. Prior to rejecting the transaction, Appellee performed a limited amount of due diligence; in particular, Appellee requested far less information from CarMax than it normally requested from other proposed transferees. Additionally, had Appellee adhered to its own relocation manual, nine of the ten factors listed therein favored the Bearss Avenue location.
Appellee presented evidence of several reasons supporting its refusal to approve the relocation and transfer. For example, the proposed relocation conflicted with Appellee‘s market plan, which encompassed placing a new dealership in a different area of Tampa. Moreover, Appellee did not want to move EHF from the “auto row” on North Florida Avenue, and it believed the Bearss Avenue location was near some undesirable businesses. Additionally, Appellee feared the relocation
II. STANDARD OF REVIEW
We review a grant of summary judgment de novo, with all facts and reasonable inferences construed in the light most favorable to the nonmoving party. See, e.g., Harbert Int‘l, Inc. v. James, 157 F.3d 1271, 1277 (11th Cir.1998). This case requires us to examine issues concerning the substantive law of Florida. In rendering a decision based on state substantive law, a federal court “must decide the case the way it appears the state‘s highest court would.” E.g., Royal Ins. Co. of Am. v. Whitaker Contracting Corp., 242 F.3d 1035, 1040 (11th Cir.2001) (internal quotations and citation omitted). Where the state‘s highest court has not spoken to an issue, a federal court “must adhere to the decisions of the state‘s intermediate appellate courts absent some persuasive indication that the state‘s highest court would decide the issue otherwise.” Ins. Co. of N. Am. v. Lexow, 937 F.2d 569, 571 (11th Cir.1991) (internal quotations omitted).
III. DISCUSSION
Appellants claim Appellee is liable, under Florida law, for (1) a breach of contract, (2) a violation of
A. Breach of Contract
To support their breach of contract claims,3 Appellants make two arguments. First, they argue that Appellee did not use “its best judgment,” contrary to section 9(a) of the Dealership Agreement, when it rejected the relocation and the transfer of the dealership. Second, Appellants argue Appellee violated the implied covenant of good faith and fair dealing.
For their first argument, Appellants concede that, under sections 5(b) & (c) of the Dealership Agreement, any relocation of the dealership from its North Florida Avenue location required Appellee‘s written consent. Appellants nonetheless argue that the “best judgment” clause of section 9(a) modified Appellee‘s discretion when approving or rejecting a proposed relocation. To comply with “best judgment” clause, Appellants say that Appellee was required to “gather sufficient information and perform an analysis to have a proper basis to exercise its ‘best judgment’ and at least follow its own guidelines and procedures.” Appellant‘s Br. 24. Whether Appellee did this, Appellants argue, is a question of fact for the jury.
We disagree. As the district court noted, it is well settled that “when the terms of a voluntary contract are clear and unambiguous, ... the contracting parties are bound by those terms, and a court is powerless to rewrite the contract to make it more reasonable or advantageous for one of the contracting parties.” Emergency Assocs. of Tampa, P.A. v. Sassano, 664 So.2d 1000, 1003 (Fla. 2d DCA 1995);
Under the [Dealership] Agreement, it is [Appellee‘s] own judgment that controls, not EHF‘s judgment, not a jury‘s judgment and not a reasonable business person‘s judgment. [Section 9(a)] merely requires that [Appellee] use its best judgment in determining the relocation of its dealerships. This clear and unambiguous provision cannot be interpreted as opening the door for a jury to second-guess [Appellee‘s] judgment or as setting limits on [Appellee‘s] reasons for making a relocation determination.
Turning to Appellants’ second argument, the implied covenant of good faith and fair dealing is a part of every contract under Florida law. See Burger King Corp. v. Weaver, 169 F.3d 1310, 1315 (11th Cir.), cert. dismissed, 528 U.S. 948, 120 S.Ct. 370, 145 L.Ed.2d 287 (1999). But the implied covenant cannot override an express contractual term. See Ins. Concepts And Design, Inc. v. Healthplan Servs., Inc., 785 So.2d 1232, 1234 (Fla. 4th DCA 2001) (citing Weaver, 169 F.3d at 1317-18). Rather than serving as an independent term within a contract, the implied covenant “attaches ... to the performance of a specific contractual obligation.” Johnson Enters. of Jacksonville, Inc. v. FPL Group, Inc., 162 F.3d 1290, 1314 (11th Cir.1998) (quoted in Ins. Concepts, 785 So.2d at 1235). In this case, the specific contractual obligation upon which Appellants rely is section 9(a)‘s “best judgment” clause; therefore, the proper inquiry is to what extent, if any, does the implied covenant modify the broad discretion accorded Appellee under the “best judgment” clause.
With the implied covenant, one party cannot capriciously exercise discretion accorded it under a contract so as to thwart the contracting parties’ reasonable expectations. See Sepe v. City of Safety Harbor, 761 So.2d 1182, 1185 (Fla. 2d DCA 2000) (holding that, even where one party has “sole discretion” under a contract, that party, in exercising its discretion, must act in good-faith and in accordance with the contracting parties’ expectations); Cox v. CSX Intermodal, Inc., 732 So.2d 1092, 1097-98 (Fla. 1st DCA 1999) (stating “where the terms of the contract afford a party substantial discretion ..., the duty to act in good faith ... limits that party‘s ability to act capriciously to contravene the reasonable contractual expectations of the other party“). Yet, the limit placed on a party‘s discretion is not great. As the Florida Second District Court of Appeal has stated, “Unless no reasonable party ... would have made the same discretionary decision ..., it seems unlikely that [the party‘s] decision would violate the covenant of good faith....” Sepe, 761 So.2d at 1185.
According to Appellants, the Cox decision by the Florida First District Court of Appeal controls the outcome of this case. 732 So.2d at 1094-1099. In Cox, two truckers contracted with CSX to haul freight. See id. at 1094. CSX had exclusive rights to the truckers’ services, thereby prohibiting the truckers from hauling non-CSX freight. See id. But the contract expressly stated CSX had no obligation to provide any specific freight to the truckers. See id. The truckers sued for breach of contract, claiming CSX was routinely giving them only low-paying freight to haul. See id. CSX argued that the contract gave it complete discretion in the assignment of freight, and it was under no obligation to assign any freight to the
Appellants’ reliance on Cox is misplaced. The central purpose of the contract in Cox was the hauling of freight. By failing to assign freight, CSX frustrated that purpose and the reasonable expectations of the parties. Here, however, the central purpose of the Dealership Agreement was to sell cars, not to relocate the dealership. In disapproving the relocation, Appellee did not preclude Appellants from selling cars. Instead, based on “its best judgment,” Appellee forbid the relocation of the dealership to a site where, granted, Appellants would have financially benefitted. Although Appellee‘s decision was not in Appellants’ best interests, it was neither capricious nor in contravention of the parties’ reasonable expectations. Therefore, the district court properly granted summary judgment on Appellants’ breach of contract claims.
B. Fla. Stat. § 320.643 (1997)4
Section 320.697 of the Florida Statutes provides a cause of action to “[a]ny person who has suffered pecuniary loss or who has been otherwise adversely affected because of a violation by a licensee of [Fla. Stat. §§ ] 320.60-320.70.” Appellants contend that Appellee, a licensee,5 is liable under § 320.697 for violating
We recently explained how
Section 320.643 provides a mechanism to regulate the transfer of dealer franchise agreements and equity interests. A licensee ... is entitled to written notice of any such transfer. To object to the transfer, a licensee must file a verified complaint with the DHSMV no later than 60 days after receiving notice. The available grounds for objection differ depending on the type of transfer. For a transfer of a franchise agreement, a licensee, under § 320.643(1), may not unreasonably withhold its approval, and all objections to the transfer—other than objections to the transferee‘s moral character or business experience—are presumed to be unreasonable. In contrast, for a transfer of the equity interest, a licensee, under § 320.643(2)(a), may object solely on the ground that the transferee lacks good moral character.6
Risley v. Nissan Motor Corp. USA, 254 F.3d 1296, 1299 (11th Cir.2001). What we did not mention in Risley, as it was not pertinent there, is that a transfer of a franchise agreement is not valid “unless the transferee agrees in writing to comply with all requirements of the franchise then in effect.”
In this case, Appellants were proposing both a transfer of EHF‘s equity
Appellants’ claims under
In this case, the “franchise then in effect” (that is, the Dealership Agreement) plainly articulated that EHF‘s dealership had to be located at North Florida Avenue. Appellants’ proposed transaction did not comply with this requirement, and thus it was invalid under
Turning to Appellants’ argument under
In this case, the proposed transfer of EHF‘s equity from the Haires to Auto Assets was inextricably intertwined with the transfer of EHF‘s franchise agreement from Auto Assets to CarMax. Thus, Appellee was free to disapprove the entire proposed transaction under either
In sum, as a matter of law, Appellee did not violate
C. Tortious Interference with Contract
Under Florida law, a claim for tortious interference with contract cannot lie where the alleged interference is directed at a business relationship to which the defendant is a party. Genet Co. v. Anheuser-Busch, Inc., 498 So.2d 683, 684 (Fla. 3d DCA 1986)(citing Ethyl v. Balter, 386 So.2d 1220, 1225 (Fla. 3d DCA 1980)). In other words, “the interfering defendant must be a third party, a stranger to the business relationship.” Salit v. Ruden, McClosky, Smith, Schuster & Russell, P.A., 742 So.2d 381, 386 (Fla. 4th DCA 1999) (citing Abruzzo v. Haller, 603 So.2d 1338 (Fla. 1st DCA 1992)).
Genet, decided by the Florida Third District Court of Appeal, is materially indistinguishable from the instant case. 498 So.2d at 683-85. In Genet, the owner of an Anheuser-Busch (A-B) wholesalership contracted with the plaintiffs to sell his wholesalership. See id. at 684. The sales contract between the owner and the plaintiffs was expressly conditioned on A-B‘s approval. See id. Additionally, the equity agreement between A-B and the owner required A-B‘s approval for any sale of the wholesalership. See id. A-B disapproved the sale to the plaintiffs. In affirming a grant of summary judgment to A-B, the Third District Court of Appeal reasoned, “Because plaintiffs’ agreement with [the owner] was specifically conditioned upon A-B‘s approval, as a matter of law, A-B cannot be liable for tortious interference with their agreement.” Id. Moreover, in support of its holding, the court emphasized that A-B was not a disinterested third-party, as it had a contractual right in the equity agreement to disapprove any proposed transfer. See id.
All the material facts from Genet are present in this case. Just as the sales agreement in Genet was conditioned on A-B‘s approval, the transfer and relocation agreement here was expressly conditioned on Appellee‘s approval. Furthermore, just as the equity agreement in Genet gave A-B the power to disapprove a sale, the Dealership Agreement here gave Appellee the power to disapprove a transfer or relocation. Therefore, pursuant to Genet, the district court properly granted Appellee summary judgment on Appellants’ tortious interference claims.9
In this case based on Florida law, Appellants contend that, by disapproving the relocation and transfer of their dealership, Appellee breached a contract, violated
AFFIRMED.
Notes
Appellants also rely on our prior decision in Frank Coulson, Inc.-Buick v. General Motors Corp., 488 F.2d 202 (5th Cir.1974). See Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981) (en banc) (adopting as binding precedent all decisions of the former Fifth Circuit handed down prior to the close of business on September 30, 1981). However, compared to Genet, Frank Coulson is quite dissimilar from the instant case, and thus we are not bound by it. Furthermore, when Frank Coulson was decided, Florida law concerning the scope of a party‘s privilege to interfere had not yet crystallized. 488 F.2d at 206. Since then, decisions such as Genet have better defined the contours of the privilege.