HI-TECH MOTORS, INC., a Montana corporation, GUNDER McCOMBS and SUE McCOMBS, Plaintiffs and Appellants, v. BOMBARDIER MOTOR CORPORATION OF AMERICA, a Delaware corporation, Defendant and Respondent.
No. 04-348.
Supreme Court of Montana
Decided July 27, 2005.
2005 MT 187, 328 Mont. 66, 117 P.3d 159
Argued February 2, 2005. Submitted February 8, 2005.
For Respondent: Keith Strong (argued), John A. Kützman; Dorsey & Whitney, Great Falls.
For Amicus Curiae: Mark D. Parker (argued), Shawn P. Cosgrove; Parker, Heitz & Cosgrove, Billings (on behalf of Montana
CHIEF JUSTICE GRAY delivered the Opinion of the Court.
¶1 Hi-Tech Motors, Inc. (Hi-Tech) and Gunder and Sue McCombs (the McCombs) appeal from the judgment entered by the Thirteenth Judicial District Court, Yellowstone County, on its order granting summary judgment to Bombardier Motor Corporation of America (Bombardier) and from its subsequent order denying their motion to vacate or, in the alternative, to alter or amend the judgment. We affirm in part, reverse in part and remand for further proceedings.
¶2 We restate the issues on appeal as follows:
¶3 1. Did the District Court err in concluding it had subject matter jurisdiction over the issue of whether a franchise existed between Hi-Tech and Bombardier?
¶4 2. Did the District Court err in granting summary judgment to Bombardier based on its conclusion that no franchise existed?
FACTS
¶5 In 1989, the McCombs opened Hi-Tech in Billings, Montana, for the purpose of selling powersports products such as snowmobiles, motorcycles and all-terrain vehicles (ATVs). Hi-Tech sells vehicles, parts and service for powersports products from a variety of manufacturers and distributors.
¶6 In 1990, Hi-Tech entered into a dealer agreement with Bombardier to sell Bombardier Ski-Doo snowmobiles. The agreement was non-exclusive in that Hi-Tech was not limited to selling only Bombardier products and Bombardier reserved the right to appoint other Bombardier dealers in the Billings area. The parties renewed the dealer agreement on a yearly basis, and the final Ski-Doo agreement expired on March 31, 2001.
¶7 In April of 1999, Hi-Tech and Bombardier entered into a dealer agreement whereby Hi-Tech would sell Bombardier ATVs. However, Bombardier did not provide, and Hi-Tech did not sell, any ATVs under the agreement. The ATV dealer agreement expired by its terms on May 31, 2000, without either party attempting to renew the agreement.
¶8 In June of 2000, prior to the expiration of the Ski-Doo agreement with Hi-Tech, Bombardier entered into a dealer agreement with Hi-Mountain Recreation, Inc. (Hi-Mountain) whereby Hi-Mountain would
¶9 In February of 2001, Bombardier informed Hi-Tech by letter that Bombardier would not be renewing the snowmobile dealer agreement with Hi-Tech when the agreement expired on March 31, 2001, because of concerns that Hi-Tech had created subdealerships in violation of the agreement. Hi-Tech has not been an authorized Bombardier dealer since March 31, 2001.
¶10 Hi-Tech and the McCombs subsequently filed a complaint in the District Court pursuant to
¶11 Hi-Tech subsequently moved for partial summary judgment on its claim that Bombardier violated the motor vehicle statutes and on Bombardier‘s affirmative defense that no franchise existed. Bombardier also moved for summary judgment on all of Hi-Tech‘s claims against Bombardier, asserting that its relationship with Hi-Tech did not constitute a franchise as defined in
¶12 The District Court denied Hi-Tech‘s motion for partial summary judgment and granted Bombardier‘s motion for summary judgment, determining that the relationship between Hi-Tech and Bombardier did not constitute a franchise as defined in
¶13 Hi-Tech then moved the District Court to vacate or, in the alternative, to alter or amend its summary judgment order and grant Hi-Tech‘s partial summary judgment motion. Hi-Tech argued that the court did not have jurisdiction to consider Bombardier‘s affirmative defense that the relationship did not constitute a franchise because Bombardier failed to initiate or exhaust the administrative remedies set forth in
LEGAL BACKGROUND
¶14 A brief overview of the statutes relevant to the issues before us is appropriate here. Montana regulates the sale and distribution of motor vehicles within the state via the statutes contained in Title 61, chapter 4 of the Montana Code Annotated (MCA). Pursuant to these statutes, all new motor vehicle dealers must be licensed by the state under the provisions of either Title 61, chapter 4, part 1, or Title 23 of the MCA. See
¶15 The Motor Vehicle Division of the Montana Department of Justice (Department) is required by statute to supervise and regulate all persons required to be licensed under Title 61, chapter 4, part 2 of the MCA.
¶16 A “franchisor” is defined as “a person who manufactures, imports, or distributes new motor vehicles and who may enter into a franchise.”
¶17 Once an existing franchisee receives notice from the Department that the franchisor seeks to terminate the franchise or establish an additional franchise dealership, the franchisee may file a written objection to the Department‘s approval of the proposed action.
¶18 Finally,
[i]f any new motor vehicle dealer incurs pecuniary loss due to a violation of this part by a manufacturer, distributor, importer, or factory branch or representative or agent thereof, the dealer may recover damages therefor in a court of competent jurisdiction in amount [sic] equal to three times the pecuniary loss, together with costs including reasonable attorney‘s fees.
Hi-Tech brought the underlying action asserting that Bombardier violated
DISCUSSION
¶19 1. Did the District Court err in concluding it had subject matter jurisdiction over the issue of whether a franchise existed between Hi-Tech and Bombardier?
¶20 In its motion to vacate or, in the alternative, to alter or amend the District Court‘s summary judgment order, Hi-Tech contended that the court did not have subject matter jurisdiction to consider Bombardier‘s affirmative defense that the relationship between Hi-Tech and Bombardier did not constitute a franchise. Hi-Tech argued that the issue of whether a franchise existed was a question to be determined
¶21 As stated above,
¶22 Notwithstanding its position that no franchise with Hi-Tech existed, Bombardier forwarded a copy of its termination letter to the Department in May of 2001, over five weeks after the agreement with Hi-Tech terminated by its terms. The Department then contacted Hi-Tech and informed Hi-Tech of its right to object to Bombardier‘s termination of the snowmobile dealer agreement pursuant to
¶23 The Department‘s hearing examiner entered a proposed order concluding that the Department had been deprived of its statutory jurisdiction over the matter as a result of Bombardier taking action without providing prior notice to the Department, and that the question of whether there was good cause to terminate the agreement or create a new dealership was moot because the actions had already occurred. She declined to address the issue of whether a franchise existed between Bombardier and Hi-Tech. Notwithstanding repeated requests by Hi-Tech, the Department never entered a final order in the administrative proceeding. Eventually, Hi-Tech initiated this action in the District Court pursuant to
¶24 As stated above, Hi-Tech contends that the District Court lacked subject matter jurisdiction to address Bombardier‘s affirmative defense that no franchise existed because Bombardier failed to exhaust its administrative remedies under
¶25 Boiled down to its essence, Hi-Tech argues that all new motor vehicle manufacturers, distributors and importers who wish to
¶26 Our role in interpreting statutes “is simply to ascertain and declare what is in terms or in substance contained therein, not to insert what has been omitted or to omit what has been inserted.”
¶27 Moreover, when the Montana Legislature intends provisions of the motor vehicle sale and distribution statutes to apply to more than one entity, it makes that intention clear. For example, in enacting the licensing requirements in
¶28 Thus, a manufacturer, distributor or importer is not subject to the
¶29 Moreover, a new motor vehicle dealer who believes its dealer agreement with a manufacturer, distributor or importer constitutes a franchise and that the
¶30 In the present case, Hi-Tech brought this action pursuant to
¶31 2. Did the District Court err in granting summary judgment to Bombardier based on its conclusion that no franchise existed?
¶32 We review a district court‘s grant of summary judgment de novo, using the same Rule 56, M.R.Civ.P., criteria as applied by that court. Arthur v. Pierre Ltd., 2004 MT 303, ¶ 14, 323 Mont. 453, ¶ 14, 100 P.3d 987, ¶ 14. In that regard,
[t]he judgment sought shall be rendered forthwith if the
pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
The party moving for summary judgment has the initial burden of establishing the absence of genuine issues of material fact and entitlement to judgment as a matter of law. Arthur, ¶ 14. If this burden is met, then the burden shifts to the nonmoving party to establish that a genuine issue of material fact exists. Arthur, ¶ 14. If the district court determines no genuine issue of material fact exists, the court determines whether the moving party is entitled to summary judgment as a matter of law. This determination is a conclusion of law which we review for error. Arthur, ¶ 14.
¶33 We first address Bombardier‘s motion on appeal to limit the use of affidavits appended to Hi-Tech‘s post-judgment motion in the District Court for the purpose of Hi-Tech‘s subject matter jurisdiction argument only. Bombardier argues that the affidavits were untimely and Hi-Tech has not established that the evidence or testimony contained in the affidavits was unavailable prior to judgment being entered by the District Court. On that basis, Bombardier contends that the affidavits cannot be used by Hi-Tech as support for its argument that a franchise existed between Bombardier and Hi-Tech.
¶34 Hi-Tech moved to alter or amend the District Court‘s summary judgment order pursuant to
¶35 In its findings of fact, conclusions of law and order granting summary judgment to Bombardier, the District Court determined that no genuine issues of material fact existed and Bombardier was entitled to summary judgment as a matter of law based on its conclusion that
¶36 A “franchise” is defined in
a contract between or among two or more persons when all of the following conditions are included:
- a commercial relationship of definite duration or continuing indefinite duration is involved;
- the franchisee is granted the right to:
- offer, sell, and service in this state new motor vehicles manufactured or distributed by the franchisor; or
- service motor vehicles pursuant to the terms of a franchise and a manufacturer‘s warranty;
- the franchisee, as an independent and separate business, constitutes a component of the franchisor‘s distribution system; and
- the operation of the franchisee‘s business is substantially reliant on the franchisor for the continued supply of new motor vehicles, parts, and accessories.
Neither Hi-Tech nor Bombardier dispute that the relationship between the parties meets the criteria set forth in
¶37 In addressing the meaning of “substantially reliant,” the District Court first observed that no statutory definition or Montana case law interprets the phrase “substantially reliant.” The court then interpreted the plain meaning of the phrase by applying the definition of “substantial” contained in Webster‘s Collegiate Dictionary and determining that “substantial” means “essential,” “significantly great” or “largely but not wholly that which is specified.” Based on these definitions, the court concluded that, in order for a new motor vehicle dealer to be substantially reliant on a supplier, the dealer would need to generate approximately 50 percent or more of its revenue from the sale of vehicles, service and parts from that supplier.
¶38 It is uncontroverted here that, in the several years prior to the termination of the dealer agreement, Hi-Tech derived only approximately 13 percent of its revenue from the sale of Bombardier vehicles, service and parts. On this basis, the District Court concluded that Hi-Tech was not substantially reliant on Bombardier for the
¶39 In Kansas City Trailer Sales, the federal district court was asked to determine whether a franchise existed pursuant to the definition of that term contained in the Missouri Motor Vehicle Franchise Act (Act). In pertinent part, the franchise definition in the Missouri Act required that “the operation of the franchisee‘s business with respect to such franchise is substantially reliant on the franchisor for the continued supply of franchised new motor vehicles, parts and accessories for sale at wholesale or retail.” See
¶40 We conclude that the District Court‘s reliance on Kansas City Trailer Sales is misplaced. First, an unpublished decision from a federal district court interpreting another state‘s statute containing language different than Montana‘s statute is of no value to this Court. Second, the federal district court‘s discussion in that case of Montana‘s
¶41 As stated above, the District Court applied the “substantially reliant” portion of the franchise definition by relating the amount of Hi-Tech‘s revenues generated by the sale of Bombardier motor vehicles, service and parts to Hi-Tech‘s overall revenues. The court determined that, if sales of Bombardier products constituted less than 50 percent of overall revenues, Hi-Tech was not substantially reliant on Bombardier for the continued supply of such new motor vehicles, parts, and accessories.
¶42 Hi-Tech asserts that the District Court‘s cutoff line of 50 percent is unrealistic and ignores alternative definitions of “substantial” which would more appropriately apply here. Hi-Tech points out that, in its summary judgment order, the court noted, but ignored, other definitions of “substantial” such as “consisting of or relating to substance” and “not imaginary or illusory, real, true.” Hi-Tech contends that incorporating these other definitions of “substantial” establishes that deriving less than 50 percent of overall revenues from sales of products from one supplier can constitute substantial reliance by a motor vehicle dealer on that supplier. Hi-Tech and amicus curiae the Montana Manufactured Housing and Recreational Vehicle Association (MMHRVA) also cite to cases interpreting the term “substantial” in other contexts in support of their argument that the term cannot be properly analyzed using a bright-line test of 50 percent. See, e.g., Buskirk v. Nelson (1991), 250 Mont. 92, 818 P.2d 375 (even evidence which is weak or conflicting may be substantial if it is not trifling or frivolous); Reed v. American Airlines, Inc. (1982), 197 Mont. 34, 640 P.2d 912 (a company‘s activities in Montana may be substantial if they comprise a significant component of the company‘s business).
¶43 MMHRVA also points out that losing 13 or 25 percent of a company‘s revenues can be enough to force the company out of business. Amicus curiae Montana Automobile Dealers Association observes that motor vehicle dealers often invest hundreds of thousands of dollars in building and maintaining a place of business and developing a service department and parts inventory, and that such dealers therefore are substantially reliant on their suppliers for a continued supply of vehicles and parts in order to recoup that investment. Additionally, Hi-Tech observes that application of the 50 percent of overall revenues standard effectively forecloses any motor
¶44 We conclude that, in analyzing whether Hi-Tech was “substantially reliant” on Bombardier in terms of the ratio between Hi-Tech‘s overall revenue and the revenue received from Bombardier products, the District Court applied an unnecessarily restrictive and simplistic standard which failed to address other non-revenue based circumstances potentially impacting on the “substantially reliant” issue. We further conclude, therefore, that the District Court erred in determining that Hi-Tech was not substantially reliant on Bombardier for the continued supply of new motor vehicles, parts, and accessories because it derived less than 50 percent of its revenue from Bombardier‘s products. As a result, we hold that the District Court erred in concluding that the relationship between Hi-Tech and Bombardier did not constitute a franchise and that it erred in granting summary judgment to Bombardier on that basis.
¶45 Affirmed in part, reversed in part and remanded for further proceedings.
JUSTICES NELSON, LEAPHART, COTTER, MORRIS and WARNER concur.
JUSTICE RICE specially concurring.
¶46 I concur in the Court‘s opinion. The Court has skillfully explained the statutes at issue and has rendered the most plausible interpretation thereof, given their imprecise wording and structure, and given the canons of statutory construction we must apply. The statutes repeatedly use laundry lists of defined business entities, see
¶47 The statutes are at times inconsistent. For example, the Court notes that Hi-Tech conducted business as a new motor vehicle dealer
JUSTICE NELSON joins in the foregoing special concurring opinion.