JOHN DEERE CONSTRUCTION AND FORESTRY CO. v. Reliable Tractor, Inc.

A.2d 595 AND CO. FORESTRY DEERE CONSTRUCTION JOHN TRACTOR, INC. RELIABLE Term, Sept. 2007. Misc. No. 12 Appeals Maryland. Court of

Sept. Denied Oct. Reconsideration (Mike LLP Bird H. of Alston & Allen Shanlever Randall L. M. Ma- Atlanta, F. Arthur and Catherine Kevin Georgia; Baltimore), on Graham, brief & P.A. nofsky of Kramon appellant. (Debra A. Roger and G. Buster B.

Kevin Getzendanner Atlanta, Georgia; LLP of Gregory of Arnall Golden Chalmers & Sandler Sher Guinot Shapiro Paul Mark Sandler Baltimore), brief, for appellee. BATTAGLIA, BELL, C.J., HARRELL,

Argued before (Retired, MURPHY, Specially GREENE, IRMA S. RAKER (Retired, Specially DALE R. CATHELL Assigned), Assigned), JJ.

GREENE, J. question from as a certified case comes to this Court This District of for the Middle District Court the United States cause good whether the are asked to decide Georgia. We (“the provision Act”), of the Maryland Equipment Dealer Act (1975, Repl.Vol.), § Md.Code 19-103 of the Commercial Article, applies agreements, Law to two dealer good where the of the Act was enacted after the contracts were executed but before the attempted termination of the contracts that gave rise to the cause of action in this case. shall

We hold that the cause provision applies to the case, dealer in agreements at issue this and that the attempt- termination, cause, ed without of the agreements at issue in case, prohibited by Maryland Further, law. we shall open-ended hold that the two agreements,1 which subject were by party notice, termination either with 120 days were following renewed enactment 19-103. Accordingly, law, which was in renewal, effect at the time of the incorporated agreements into the Maryland accordance with law.

FACTUAL AND PROCEDURAL BACKGROUND adopt the underlying We facts as set forth by the United States District Court for the Middle District of Georgia its certification order. The court stated: Tractor,

Plaintiff Reliable Inc. is an authorized dealer of [appellant2] John Deere Construction Forestry Compa- & (“John Deere”) ny’s Forestry Equipment Utility Equip- ment lines. The agreements dealer under which [Reliable] as an operates authorized John Deere dealer were entered into [Reliable] [John Deere] 1984. On March 2007, [appellant] John Deere issued a notice of termination to [appellee], stating that [appellant] going to terminate open-ended agreement agreement provide An is an that does not terms, specific expiration by date its own but rather will continue contract, indefinitely until either or both terminate the in this case, days after 120 notice. 8-305(b), certifying 2. Pursuant to Md. Rule court identified the ("John Forestry Company Defendant Deere”) John Deere Construction & matter, appellant to be treated as in this and we therefore refer Tractor, appellant, to John Deere as appellee. and Reliable Inc. agreements The dealer days. in agreements the dealer may agree- terminate that John Deere state specifically days notice gives Deere John vnthout cause ments if and [John At the time [Reliable] to termination. prior did Maryland agreements, dealer into the entered Deere] of a dealer the termination any prohibited have law that cause. without agreement Dealer Con- Equipment enacted Maryland

In 1987 Act”). Ann., (“the Dealer See Equipment Act tract Md.Code 2007). (West §§ 19-305 19-101 Law Com. Dealer Act Equipment

Maryland Legislature amended Deere, as John suppliers, such equipment provide cause” good “without a dealer cannot terminate (“the See Md.Code Ann., provision”). cause good Law Com. § 19-103. judgment case, summary has moved for

In this [Reliable] declaratory which seeks a complaint, II its on Count ter- attempted without cause Deere’s] judgment [John Act. Dealer prohibited by Equipment [John mination is hand, Equipment Deere], the other contends to this apply does not Dealer Act’s cause good enacted after the provision was case because the executed, Maryland at issue were agreements dealer law law does not the retroactive permit legislative of clear intent. the absence omitted.) (Footnote following question District Court then certified the U.S. (1973, Court, Repl. pursuant law to this to Md.Code Artic

Vol.), Proceedings § and Judicial 12-603 of the Courts le,3 and Md. Rule 8-3054: (1973, provides: Repl.Vol.), 12-603 Md.Code § 12-603. Power to answer. may question of law Appeals of this State answer The Court appellate by an court of it of the United States or certified to court tribe, an may be determinative of state or of a if answer

another certifying there no pending litigation court and issue decision, provision, appellate statute of this controlling constitutional State. Maryland

Whether the Dealer Equipment good Act’s provision applies cause to the of termination a dealer agree- ment where the dealer was entered into before the good alleged cause was enacted but the with- out cause termination occurred after the provi- sion enacted?

DISCUSSION Maryland currently prohibits law suppliers5 from terminat- provides: 4. Md. Rule 8-305 questions Rule 8-305. of appeals. Certification of law the of court (a) Certifying "Certifying court. court” as used in a this Rule means Code, Article, by § certify question court authorized Courts 12-603 to a of the Appeals Maryland. law to Court of of (b) it, disposing pending Certification order.. of an action before court, initiative, certifying any party may of motion or on its own State, Appeals question submit the Court of lawof of this Questions Maryland accordance the with Uniform Certification of of Act, by filing Law a certification order. The certification order shall by signed judge certifying of the question court and state the of law submitted, arises, the relevant from question facts which the and the party appellant who as the proce- shall be treated in the certification original copies dure. The order and seven shall be forwarded to the Appeals by certifying Court the of clerk of the court under its official seal, together regular filing docketing appeals, payable with the fee for Appeals. to the Clerk of the Court of (c) Proceeding Appeals. filing in the Court of of the certification Appeals equivalent order the of Court shall be the of the transmission addition, appeal. Appeals may of a record on request, The Court of any part Upon all or the certifying request, of record before the court. certifying original copy parts court shall file the or a of the of the certificate, requested together record with a of under the official seal certifying court, signed by judge stating court and clerk parts requested by the materials submitted are all the of the record Appeals. Court (d) by Appeals. opinion Decision Court The written Appeals stating governing question Court of law certified shall by Appeals be sent certifying Clerk the Court of to court. The Court, Appeals certify, Clerk of Court shall under seal of the opinion response question is in of law of this State submitted certifying court. "wholesaler, "supplier”

5. A part is defined in relevant as a manufactur er, or who into a distributor enters contract with a dealer.” Md.Code (1975, 19-101(k)(1) Repl.Vol.), Law Commercial Article. (“the good cause good cause” contract “without a dealer6 ing (1975, § 19-103 Repl.Vol.), Md.Code provision”). “ 19-103”). (hereinafter This re Law Article Commercial a “good cause” to terminate have suppliers that quirement Laws, in 1998 Md. ch. enacted was first dealer contract that, provi good cause argues Deere because John 333.7 of the statute to application until not enacted sion was a retroactive in 1984 would constitute executed the contracts analysis, a retroactive Applying of the statute. application apply cannot argues Deere that the statute John case, for a requirements in it fails both this because contracts there must be application of a statute: retroactive proper retroactively, to apply intent for the statute legislative clear with of the statute must interfere application and the process. rights, deny vested or due contrast, that argues, application Tractor Reliable appli- a retroactive cause would not constitute good provision argument Tractor’s based on cation of the statute. Reliable that, agreements open-ended these were its assertion that termination, effec- required days notice they because such, tively day of 120 contracts. As Reliable became series in provision application Tractor asserts that effect, is, case as neither had a prospective, party beyond right day vested the contracts that notice period. that, pursuant in its

John Deere is correct assertion law, a Maryland proper application retroactive a statute first, requires part analysis: two a determination legislature clearly apply retroactively, intended the statute to person engaged selling 6. A “dealer” is defined “a in the business of construction, farm, utility, equipment, imple at retail or industrial attachments, ments, machinery, power repair equipment, outdoor 19-101(e) (1975, parts.” Repl.Vol.), § Md.Code of the Commer cial Law Article. Laws, Although was it amended 2005 Md. ch. require suppliers "good statute continues have cause” before terminating a dealer contract. second, a determination that retroactive does not “impair rights, deny vested process, due or violate the prohibition against post ex laws.” Allstate Ins. Co. v. facto Kim, 276, 289, (2003). not, doWe however, reach the retrospective application analysis because we conclude that applying good cause these contracts is not a application, retroactive but rather a prospec- tive one.

It is in Maryland well-established subsisting “laws the time of the making of into enter and form part if expressly thereof' as to or incorporated referred in its terms, and principle provisions embraces alike those which construction, validity, affect discharge and enforcement v. Mayor contract.” Dennis and City Council Rock ville, 184, 189, 284, 286 (1979); Md. 406 A.2d 287 see also America, 625, 645, Lema Bank 504, v. 375 Md. 826 A.2d 516 (2003) (noting “parties presumed are to know the law contracts, thus, when entering into and ‘all or applicable relevant must laws be read into the just if expressly provided by them, except contrary where a ” intention is evident’ v. (quoting Wright Commercial & Sav. Bank, 148, 153, (1983))). 1080, 297 Md. 464 A.2d 1083 In order to determine provision whether the cause existed contract, the time of the “making” such terms, provision was in its incorporated we must first decide whether the good being 19-103 is applied retroactively prospectively. or

Generally, the presumption is that statutes operate unless prospectively contrary there is evidence of a intent. Kim, 289, 376 829 Md. A.2d at 618. have said We “ ‘[rjetroactivity, even where permissible, is not favored and ” found, except upon plainest mandate in the act.’ Hearn, 575, 582, State Farm Mut. Auto. Ins. Co. v. 242 Md. (1966) 820, State, 219 356, A.2d v. (quoting Bell 236 Md. 54, (1964)). 369, 204 A.2d “This rule of construction is particularly applicable adversely where the statute affects ma- altering procedural only rather than rights, substantive Id. chinery.” analysis date, clearly we have established although

To retroactively, this Court has a statute applying used when retrospec limited constitutes analysis of what only provided 289-90, Kim, 376 Md. at See tive of a statute. application of a only application that retroactive (noting 618-19 A.2d at “ acts significance of legal ‘determine^] one that statute is ” (quoting date’ to its effective prior or that occurred events Div., 120, 278 Md. Rel. v. Amecom on Human State Comm’n 396, (1976))); Riffe, 359 Md. 123, 1, Langston v. 360 A.2d 3-4 (2000) “retroactive” 406, 389, (defining the terms operate which on transactions as “acts “retrospective” existed obligations which rights or which have occurred act”); Ethics Comm’n see also State passage before (2004) J., (Harrell, Evans, 370, 389, 855 (“Our cases, have not part, the most dissenting) however of, an developed the definition any depth considered instance, what determining the first analytical paradigm for statute.”). of a retroactive constitutes has Court of the United States Notably, Supreme applica retroactive guidance on how to define provided some Products, 511 U.S. Landgraf v. USI Film tion of a statute. (1994), 244, 280, L.Ed.2d 114 S.Ct. of a statute application Court defined retroactive Supreme he when rights party possessed “would impair one that conduct, impose acted, party’s liability past increase a already completed.” transactions respect new duties with rule, “a noting line statute rejected bright The Court applied it is merely not because operate ‘retrospectively’ does the statute’s enactment. antedating in from conduct arising a case 1499, 269, at 511 U.S. at S.Ct. Landgraf, . . .” Instead, “process required the Court L.Ed.2d at 254-55. change the nature and extent judgment concerning operation degree the law and the of connection between Landgraf, U.S. past the new rule and a relevant event.” In the process, 128 L.Ed.2d at 255. S.Ct. at notice, factors to be considered are “fair reasonable reli- ance, and expectations.” settled Id. adopt We that analysis. factors, these

Considering case, and the facts of this we hold that the application of the good cause § 19-103 to these contracts is prospective, and therefore we do apply a retrospective analysis. case, In this contracts, terms, by their could be by terminated either party any cause, time without good merely by providing days then, notice. It is logical, that neither party could reasonably expect the contracts to continue for days more than 120 from any given enacted, date. Once the statute was the parties Lema, were on constructive notice of its existence. See Md. at 826 A.2d at 516 (noting that “parties presumed are contracts”). to know the entering law when into By continu ing perform their obligations under the contracts without termination, providing notice of effectively re newed their contracts consistent with the applicable law effect at the time. (noting See id. that “‘all applicable or relevant laws must be read into the agreement of the parties just them, as if expressly provided by except contrary where a intention is evident’” (quoting Wright, 297 Md. at 1083)). notice, A.2d at Balancing principles of fair reasonable reliance, and expectations, settled we conclude that the correct analysis light of these facts is a prospective, rather than a retrospective, the statute.

Furthermore, case law our supports determination that a retroactive analysis does not apply open-ended agreements they when are allowed to continue for than longer the duration period, notice after the enactment of an applicable statute. hand, a case strikingly similar to the case at United States Court of for the Appeals Fifth Circuit noted that “an open ended dealer agreement which empowers either party to terminate without merely by furnishing, say, (30) thirty days’ notice to the party, other might construed aas month-to-month agreement which automatically recon- ducts itself each month until such notice is furnished one of the parties.” Northshore Inc. v. Cycles, Corp., Yamaha Motor

149 Cir.1990). case, (5th Northshore 1041, 1043 919 F.2d against suit brought products, of Yamaha a dealer Cycles, inventory. North its repurchase to force Yamaha to Yamaha between agreement The dealer shore, at 1043. 919 F.2d inventory repurchase option gave Yamaha parties two Northshore, termination, it to do so. obligate did not but upon execu the contract’s time between 1042. In the 919 F.2d requiring termination, enacted statute Louisiana and its tion terminating a upon inventory repurchase manufacturers open- reasoned The Fifth Circuit contract. Id. dealer date, a fixed termination without agreements ended dealer party provides automatically until either instead renew the duration lasting contracts notice, individual are akin to Northshore, 919 F.2d at period. the notice Engineering v. Manitowoc Co. Equipment In Cloverdale (E.D.Mich.1997), the United States Co., 1152 F.Supp. discussed Michigan District of for the Eastern Court District con- a dealer involved Cloverdale opinion. the Northshore days with party either tract, subject to termination F.Supp. at year. one notice, to last only that was their continued parties expiration, the contract’s After expiration Eight days after relationship. Id. business requiring “good law contract, Michigan adopted one-year contract, to terminate such supplier for a cause” order the dealer of later, notified the manufacturer four months Cloverdale, days. contract after 90 to terminate the its intent of whether the In its at 1154-55. discussion F.Supp. court noted retroactively, Cloverdale Michigan applied law contracts with of open-ended court’s discussion the Northshore no provided that Northshore but determined provisions, notice provi- automatic renewal express was no where there guidance F.Supp. sion, open-ended an contract. nor was there Northshore, Cloverdale, but similar Unlike 1160-61. open-ended agreement. involves an case present requires in the case agreement present Applying before termination. days notice provide case is a succes- rationale, Northshore Therefore, if lasting days. of renewable contracts sion Deere provided had notice of termination within days 19-103, § the enactment of to apply that enactment contracts at issue would then constitute a applica- retroactive Deere, however, tion of the law. did not attempt to terminate contracts, cause, without until more than days after Thus, 19-103 became by time, law. the contracts had already renewed. Accordingly, any application §of 19-103 to the contracts as renewed prospective constituted a application of the law.

John Deere relies on Rigger Baltimore County, Md. 306, (1973), 305 A.2d 128 for the proposition that the applica- tion of the statute this case would be In retroactive. Rigger, relevant statute declared that lease provisions holding landlords harmless from liability injuries arising from their own negligence against were public policy. 269 308, Md. at 130. We held that the statute could not be retroactively applied to a lease which was executed prior statute, to the enactment of the but where the injury question occurred after the enactment of the statute. Rigger, 312, 269 Md. at 305 A.2d at 132.

Rigger ten-year involved a lease executed in 1960 that included an indemnification whereby clause the tenant was required to indemnify injuries landlord for sustained 307, third on the premises. 269 Md. at 305 A.2d at 129. In Assembly General deemed exculpatory such void, clauses they were contrary public policy. Rigger, 269 Md. at 305 A.2d at 130. In party third who injured sued, was on the premises a dispute arose toas the liability of the lessor and the lessee. Rigger, Md. at 308-09, 305 A.2d at 130. we Rigger, said that “[t]he determinative event in this context is the execution of the lease, and not the happening accident.” 269 Md. at 305 A.2d at

Our decision in Rigger is not incompatible with the rationale in rationale, Northshore. Under the Northshore term, where there is a contract with a fixed executed prior the effective date of a statute to expire and set after the statute, of the statute date effective allowed to renew after the contract was unless retroactive In Rigger, F.2d at 1043. See 919 became effective. statute term, prior to the effective was set executed for a Md. at thereafter. expire and set of the statute date case, however, is 307-08, present at 129-30. The in North- Like the situation Rigger. from distinguishable effec- shore, contracts that were open-ended case involves enacted. renewed tively after contracts, the of execu- date nature periodic Given execution, rather is, original but therefore, not the date tion the Because day recent renewal. of the most the date the of following enactment were renew contracts allowed applies prospectively. provision, provision cause that good the that suggest that cases argues Maryland Tractor Reliable date, determining whether purposes relevant for of the date the event retroactively, is the of being applied is statute action, not the cause of and date rise to the giving the the It fact that of the contract. maintains execution the before good into their contract entered Hearn, In is irrelevant. being completely came into the contract and both execution of the insurance although the statute, the enactment preceded date of the accident 3,1964, on noted that “the accident occurred March this Court did against Robert on and the statute April was filed suit of right until June The substantive effective not become the had ac- policy in accordance with Farm notice State came effect.” Md. at before statute into crued the the this Court was not 219 A.2d at 824. The date noted executed, date of the but instead the date that accident. Id. the Hearn, noting that subsequently Court discussed

This has in effect apply policy insurance] ... not a[n “the statute did 3, 1964.” Washington an accident occurred March when Heights Volunteer Sanitary Comm’n Riverdale Suburban (1987) Co., Inc., 556, 561, Fire Hearn, added). or Accordingly, in the relevant acts (emphasis policies, to our construction of insurance pertaining events case, prior occurred to the In statute’s effective date. case, however, present the relevant acts events oc- Therefore, curred after the statute’s our effective date. analy- sis in does Hearn not control outcome this case.

Furthermore, assume, even if we arguendo, our case law is inconsistent on the of point whether the relevant date is, determining not, that the application of a statute or is retrospective is the date of the execution of the contract or the gave action, occurrence of the event that rise to the cause of we need resolve that assumed in this discrepancy case. case, contracts, both date the execution of the the attempted date of termination that rise gave to the claim, place statute, took after the enactment of the therefore the statute prospective. contracts, ongoing nature together with 120 day notice provision, effectively created a 120 day series of con- Northshore, tracts. See 919 F.2d at 1043. Because the contracts were allowed to renew after the enactment of the statute, the contracts were executed subsequent enact- Likewise, ment of the statute. gave event that rise to the cause of action this case is Deere’s termination attempted cause, without good contracts which on March occurred after the long enactment cause provision. Because the both execution contracts and the event the of giving place rise to cause action took to subsequent the statute, of enactment the the statute applies prospectively. Finally, the provision contractual which allows for ter mination in clearly without cause is conflict the statutory with 19-103, provision requires of which termination good cause. have said that contract provision We a that violates set in public policy forth a statute is the invalid to extent of the conflict between the contract and policy. Mayor that & Clark, 13, 33, City Council Baltimore v. 404 Md. of “ (2008) 1122, (reiterating 1133-34 that ‘a conflicting contract with public policy set forth in a statute to the is invalid extent ” of the conflict between the contract and that policy5 (quoting McCabe, (2002))). Medex v. in this at case contracts issue Thus, provisions the the extent are invalid the without cause good termination allow in cause set forth provision with good conflict the they § 19-103. QUESTION ANSWERED AS OF LAW

CERTIFIED EQUALLY BE DIVID- TO FORTH ABOVE. COSTS SET THE PARTIES. ED BETWEEN JJ., MURPHY, CATHELL,

HARRELL, Dissent. J., HARRELL, which MURPHY Dissenting Opinion CATHELL, JJ., join. mischief, thing the the only than Court’s

I Other dissent. Tarantino to inspire Quentin in may this matter opinion Fiction,” Fic- “Legal called sequel “Pulp produce confronting implica- constitutional In to avoid tion.” order good provision cause retrospective tions of opinion con- Majority improperly question, statute in contractual notions renewal and distinct separate flates regard, signifi- it threatens mere In this versus continuation. contracting parties. vested damage rights cant applying to “conclude that Majority opinion strains retrospective contracts is not a these Majority op. one.” prospective but rather application, conclusion, opinion reaching 957 A.2d at 599. First, it my extends in two view. significant respects, errs gener- beyond any Maryland precedent principle well into a contract existing entering laws the time ally Second, Majority opinion of that contract. part become with mere making equates improperly already existing open- under an performance continuance of contract, authority to settled direct contradiction ended drawing distinction between two. clear I. under is correct that it is well-settled Majority opinion “ making subsisting ‘laws the time Maryland law that of a enter part contract into and form a as if expressly thereof terms, referred or its and the incorporated principle validity, embraces alike those which provisions affect ” construction, discharge and enforcement of contract.’ 146, Majority at 599 op. (quoting A.2d Dennis v. Mayor Rockville, 189, 284, (1979)). 184, 286 Md. 406 A.2d of There plethora is a of Maryland authority long standing holding contracting parties implicitly incorporate that relevant currently laws into their existing agreements, agree at least Dennis, such comply 191, with laws. See 286 Md. at (holding city A.2d at 288 requiring ordinance property provide purchasers owners to with required certain informa tion, sale, prior entering a contract of granting purchas ers a right of rescission the event the information was not supplied, incorporated was into the contract because the ordi made); nance existed at the time the contract v. was Beca Balt., 177, 182, 478, (1977) Mayor 279 Md. 367 A.2d (holding police department regulation requiring certain departmental expenses be reimbursed incorporated was into employee’s employment contract with the department because time regulation existed at the was made and was under promulgated designated authority police commissioner); Co., 460, Fed. v. Ins. Co. Allstate Ins. 275 Md. (1975) 473-76, that, 407-10 (holding because party to the contract was an automobile authorized shipper (“ICC”) the Interstate Commerce Commission engage business, such the contract between the parties incorporated certain restrictions ICC because existed restrictions at the made); time the contract was Downing Corp. Dev. v. Brazel ton, (1969) 398-99, (holding 252 A.2d statutory requirement that a majority two-thirds approve a corporate stockholders sale substantial assets into incorporated sale proposed agreement); Holmes Sharretts, (1962) 358, 369, 228 Md. 306-07 that, (holding because of the under circumstances which trust agreement was created and on the expertise based persons creating it, the agreement comply was intended to with, terms, and therefore into its incorporate own the ten

155 v. Men- Dep’t Whitworth statutory period); limitation year (1960) 765, 98, 104-05, A.2d 768-69 158 222 Md. Hygiene, tal entitling Department provision a (holding statutory a the estate of against claim to make Hygiene Mental institutions, for past one of its committed to person, deceased incorporated became person of that support and maintenance and the the deceased’s trustees between into preceded the provision enactment of County because changed substantively was not and formation 27, 33-34, 146 thereafter); 219 Md. Scheungrab, v. Griffith (1958) statutory a federal 864, (holding that 868-69 A.2d with a buyers provide certain sellers to requiring incorporat- the property of the value of appraisal written because, from judging the parties between into the contract ed circumstances, impliedly terms and the contract important The provision). point with the comply intended to contracts, that, regard to authorities is with to note from these finding consistently little difficulty courts have Maryland is existing at time a contract regulations that statutes and part into and become may incorporated formed terms of that contract. obverse, consistently have Maryland courts

Considering the expression contrary a clear unwilling, been absent enactment, enacted statutory post- find that statutes incorporated pre-exist- into the agreement should be deemed Mary- agreements by implication legal or fiction. Under ing favored, law, is of a statute not retrospective application land statutes, and is that all federal general presumption state, v. Rigger Balt. operate prospectively. are intended (1973) 306, 310, 128, (citing 131 County, 269 Md. 305 A.2d Hearn, 575, 242 219 Ins. v. Md. State Farm Mut. Auto. Co. State, 356, (1966)); 236 Md. 204 A.2d 54 A.2d 820 Bell v. Co., (1964); 39, 198 81 Deposit & Trust Md. Gutman Safe Statutory (1951); 2 A.2d 207 Sutherland, Construction (3d ed.1943). only by is rebutted presumption 2201 contrary found in the statute expression clear 310, 305 legislative history. its 269 Md. at possibly Rigger, Bowman, 705, at Fund v. Md. (citing A.2d Unsatisfied Farm, (1968); 820; State Md. 219 A.2d “ Bell, 54)). 204 A.2d ‘It well settled that a given retrospective statute will not be operation, unless its clear, strong imperative words are so retrospec- their tive expression that no other can meaning be attached to them, or unless the manifest intention of the could Legislature ” gratified.’ otherwise be Rigger, 269 Md. at Gutman, 208). (quoting Md. 81 A.2d at Two compelling examples the reluctance on the part Maryland courts in finding application of retrospective a statute to a contract, absent clear statutory are the language, cases 306, Rigger County, v. Balt. 269 Md. (1973), 305 A.2d 128 Hearn, State Farm Mut. Auto. Ins. 575, Co. 242 Md. 219 A.2d 820.

In pertinent voided, the Rigger, statute on public policy grounds, the inclusion in a provisions lease of exempting liability landlords from for injuries stemming from the land- negligence. 308, lords’ Rigger, 269 Md. at 305 A.2d at 130. The statute in question by was enacted the Assembly General in 1964 and became effective on 1 June of that year. Rigger, 308, 269 Md. at 305 A.2d at 130. The lease at issue in Rigger was executed on 10 November 1960 and contained type the exact of exculpatory clause the Assembly General to prohibit by intended statute. Rigger, 307, 269 Md. at A.2d 1965, at 129. On 17 November third party suffered injuries personal by allegedly caused a defective of a condition on walkway premises. the landlord’s Rigger, 269 Md. at 308- 09, 305 A.2d at 130. The issue before this Court was whether the statute applied retrospectively could be to the lease agree- ment executed in 1960. at Rigger, Md. at A.2d 131-32.

In holding that the statute could not applied retrospec- be tively agreement, to lease this Court found that because the statute expression lacked “clear of an intent to it apply retrospectively, ... a retroactive of the statute to might the lease well questions.” raise serious constitutional Rigger, 269 Md. at at finding 305 A.2d 131. rights parties’ expectations were created and defined the determinative enacted, we held that was the statute before lease, the execution circumstances was event these at 269 Md. Rigger, accident. happening not the Thus, determinative event because the A.2d 131-32. at statute, to statute, lacking language clear pre-dated lease. applied retrospectively contrary, could be statute declared that Likewise, pertinent Hearn liability vehicle to disclaim motor that seek policies insurance give the insurer notice insured’s failure to insurance due prejudice actual proves effect if the insurer only given may Hearn, 581-82, 219 242 Md. at to such failure. attributable terms, statute, did not become its at 823-24. Hearn, at until June 1964. effective case was Hearn issued policy at The insurance rise June, gave claim and the accident well before Hearn, 583, 219 A.2d 242 Md. at occurred 3 March 1964. occurred, genuine issue After the accident insured complied whether the had generated material fact was requirement, and thus whether policy’s with the notice required indemnify one of the company insurance Hearn, 583-85, 219 A.2d at 824-26. One parties. Md. applica- on review was the of the issues this Court addressed statute, postdating agreement both the insurance bility Hearn, accident, policy question. insurance and the to the 581-83, 219 A.2d 823-24. Md. at at presumed all are to Emphasizing principle the that statutes expression unless there is a clear to operate prospectively contrary, applied the Court held that the statute could not be such retrospectively policy applica- to the insurance because the insurer’s substan- impermissibly tion would interfere with deny noncompliance to for with right liability tive contractual Hearn, 581-83, at 219 A.2d at provision.1 the notice Md. ac- right this substantive contractual had 823-24. Because it evident that the statute here "[w]e The Court stated that deem Hearn, rights.” at affects Md. involved substantive right to notice has 824. The contractual cancel a contract without right. Sales Co. v. Microsemi- been held to be a substantive Bitronics (D.Minn.1985), Corp., F.Supp. 550 discussed conductor infra. effect, crued before the came statute into the insurer was Hearn, requirement entitled to assert the notice as a defense. 582-83, 242 Md. Hearn Thus, 219 A.2d at 824. stands statute, proposition post-agreement absent clear language contrary, applied should not be contractual rights that accrue before the effective date the statute.

II. Hearn, Rigger Based on it seems clear me in the present case that if party’s right either to terminate open- contract, subject ended day to the 120 period, notice but requisite cause, without the showing accrued or vested before the effective date of the Maryland Legislature’s Act, amendment of the Equipment Dealer the 1998 amend ment applied may retrospectively be between John Deere and Reliable Tractor.2 There simply is no Maryland holding case that a statute that otherwise would rights alter contractual may involved be applied, without retrospective clear an language, made before the effective See generally date statute. Inc., Dua v. of Md., Comcast Cable 604, 630, 370 Md. (2002) (“In 1061, 1076 light of this Court’s it clear opinions, is retrospective statutes abrogating rights vested property (including rights) contractual violate the Maryland Constitu tion.”). Thus, only means which may the statute be applied to the contract between John Deere and Reliable if Tractor is the parties are deemed to made have a contract may be implementing This conclusion drawn because the 1998 statute change any lacks part Legisla- indication an intent applied ture retrospectively. statute be Under State Ethics Evans, (2004), Comm'n v. 855 A.2d 364 a statute not to clear, given operation strong retroactive "unless its words are so imperative, them, meaning that no other can be annexed to unless Legislature the intention of the could not be otherwise satisfied.” Evans, 383-84, (quoting 382 Md. at 855 A.2d at Williams Johnson, (1869)). Laws, 30 Md. ch. the statute states, alia, implemented good change, merely that inter that purpose it establishing is for the of cause standard and is to take satisfy effect October which is insufficient the Evans standard. 1998 amend- date of the 1998, the effective 1 October after Laws, ch. 333. ment. 1998 Md. a means, embraces Majority opinion recognize

To that agreement post made an parties legal fiction the contract notion that 1998, dependent October open-ended was an Deere Reliable Tractor John between for termination. period defined notice with a contract awith defined open-ended an contract theorizes that Majority is, effect, of contracts a series period notice termination of notice period. as the duration lasting only long so each 152-53, Reliance on 957 A.2d at 602-03. Majority op. at misguided. fiction is tortured

III. conclusion is First, Majority’s law support the case adopted has never been on dicta two cases and purely based as resolving dispute a similar holding single a a court as Second, Majority opinion’s present in the case. the one with to cancel an contract open-ended that the failure premise runs, period defined period, a defined termination before that parties making the two considered the same as should be every subsequent for each and to a new contract agreeing precedents well-settled notification contradicts period, is to be considered clear distinction between what draw a date of statute of contract after the effective renewal incorporating therefore agreement, affect the purporting to should be agreement, into the versus what the provisions pre-dating mere continuation an considered the the new incorporating statutory change, and therefore law.

A. here, held, continu- Majority court has until the No termination the notice for beyond ation of an at-will “making” series equivalent period is the on which the The two cases principal contracts. independent theory series opinion support rests fail its Majority 160

individual, fictional contracts. In Northshore Cycles, Inc. v. (5th Cir.1990), Yamaha Motor Corp., 919 F.2d 1041 the court considered whether a requiring 1988 statute of manufacturers motorcycles repurchase inventory from upon dealers cancel lation of the dealer agreement to a dealer applied agreement Northshore, in executed 1984. at Although F.2d the court mentioned in open dicta that “an ended dealer agreement which either empowers party terminate without (30) merely furnishing, by say, thirty days’ notice to the other party, might be construed as a month-to-month agree automatically ment which reconducts each itself month until such notice is furnished one of parties,” the court that, held actually upon based review of parties, between the there any was insufficient indicia of renewal or original reconduction 1984 agreement after Northshore, 1988 effective date of the statute. 919 F.2d at Thus, the statute under such circum right stances would violate Yamaha’s to constitutional protec tion laws against impairing obligations preexisting Northshore, case, contracts. 919 F.2d at 1044. The other Co., Cloverdale Co. Equip. v. Manitowoc Eng’g F.Supp. aff'd, (E.D.Mich.1997), (6th Cir.1998), F.3d 1182 seems included the Majority opinion simply because Northshore Michigan federal opinion, court discussed de found, spite the fact that it as even the Majority opinion here concedes, that Northshore provided no in the guidance holding Cloverdale, 1161; the case. 964 F.Supp. at at Majority op. 150-51, 957 602-03. The Cloverdale opinion instead addressed whether a statute applicable should found to a contract of one year expired eight term that days before statute, effective date of the yet continued Cloverdale, perform. Thus, F.Supp. 1161-62. nei ther Majority case which the did depends actually a court adopt part holding open-ended the notion that an contract is really series mini-contracts.

B. on point case law draws a clear distinction between Bitronics continuation Sales Co. Micro- versus renewal. (D.Minn.1985), the F.Supp. Corp., semiconductor of Minnesota for the District States District Court United standard, in Minne- adopted regulatory whether a considered for termination of good cause requiring in 19753 and sota agreement, franchise apply agreement, should franchise will. Bitron- termination at permitted executed “as change adopted The was ics, at 555-56. F.Supp. 610 franchises designed protect potential to legislation remedial perceived and other unfair contracts Minnesota from within Bitronics, industry.” franchise in a national growing abuses the intentions of Despite 556. the remedial F.Supp. at 610 that, given found Court Supreme the Minnesota legislation, (identical Maryland) pre- to Minnesota’s standard effect unless retrospective rules have no suming new laws and new legislature, the the manifestly by intended clearly standard to clear and manifest satisfy did not the legislation effect. Mason v. retroactive give requirement the (Minn.1979). Thus, Cos., N.W.2d 348 Farmers Ins. in Bitronics was confronting the District Court only the issue may incorporated into standard be regulatory whether the of the nature of agreement by virtue parties’ or the thereunder. parties’ itself actions Bitronics, found that the fact that In the District Court that was to “com- provided it parties contract between the until terminat- on the date it is executed continue mence ” incorporated into the alone to deem as ed was insufficient Bitronics, regulatory change. agreement post-agreement added). the court finding, In so F.Supp. (emphasis at reasoned: retroactivity to be avoided problem have found the

Courts new negotiations agree- for a parties entered into where on a specific or renewed contract that terminated ment franchise act. subsequent the effective date date regulation seq § promulgated under 80C.01 et 3. Minn.Stat. Bitronics, January F.Supp. at and became effective on incorporate was amended in 1981 to 556. Minn.Stat. 80C.14 Bitronics, F.Supp. regulation at part of the into the statute itself. 556 n.

In these parties circumstances the were fresh making a decision whether to continue the contractual relationship; thus no retroactive application was involved. Minor modifi- prior sufficient, cations of contracts are not however. There must a significant be or material alteration the relation- ship parties between a new contract to which exist postdates the Act.

Bitronics, (internal omitted). 610 F.Supp. at 556-57 citations Bitronics, case, in the present as termi party either could will; thus, nate the contract at could considered agreed, it, have the Majority opinion would have hundreds or daily thousands of individual contracts. Bitron ics, 557; 151-53, 610 F.Supp. Majority at op. 957 A.2d at Nonetheless, 602-03. right Bitronics court found will, to terminate the right agreed upon was a agreement, right contractual prior that vested the 1975 regulation effective date of the agree and thus the ment could not be subsequently regula altered enacted tion absent clear retrospective language. Bitronics, 610 Thus, F.Supp. only at 556. the other upon basis which to apply post-agreement regulation the statute or was whether parties necessary the made the “fresh decision” to continue relationship contractual under the new statutory regula or tory Bitronics, regime. See 610 F.Supp. at 557. this Under fiction, exist, if found to would parties be deemed to have made “fresh necessary decision” either having entered into negotiations agreement for a new after the date effective regulation, statute or or renewing a contract on a specific terminated date to subsequent the effective date of the statute or regulation.4 court, addition,

4. The significant Bitronics in would have considered a agreement material alteration of the parties post-dating between the regulation apply effective date of the statute or sufficient regulation agreement statute or to the because under such circum- parties stances the would be deemed have satisfied the "fresh Bitronics, F.Supp. decision” standard. See at 557. This consider- analyzed purposes ation need not be for the of this case because there presented no parties indication from the facts Court that agreements. modified their 1984 dealer holding Bitronics is a well-settled solution post- The dilemma, agreement applicability applied by other courts on Nissan, McKay several other occasions. See Ltd. v. Nissan (N.D.Ill.1991) U.S.A., Motor Corp. F.Supp. (“None of the by McKay identified demonstrate amendments parties entered into a agreement. parties new The certainly renegotiate did not the terms of the franchise agree amendments, nature, ment. The which were administrative did not change parties’ rights. contractual Nor did the amendments vary responsibilities and duties of either short, party. the contractual modifications at issue were too insubstantial to have established a new which replaced original agreement.... franchise The Act may imposed previously not be to interfere with this existing relationship. parties’ rights contractual The prior vested and, therefore, McKay the Act’s effective date cannot resort to provisions Royal the Act’s for a Rochester v. remedy.”); (W.D.Wis.1983) (“It Co., Appliance Mfg. F.Supp. that, apparent is thus as it concerns between the acts effective (1974) amendments, date of the WFDL and the 1977 the acts satisfy must the ‘entered into’ language original WFDL coverage before imposed. under the WFDL can be parties this case did not into a new dealership enter plaintiff relinquished when part territory. of his change may While this have been plaintiff, substantial to the it equivalent is not to the kind of changes contemplated by the Kealey decision. making Rather than a ‘fresh decision’ wheth plaintiff distributor, er to continue as a continued the pre-existing relationship, scale.”); albeit on a smaller Kea Serv., ley Co., Pharmacy & Home Care Inc. v. Walgreen (W.D.Wis.1982)(“When F.Supp. it the Fair enacted Dealership Law in the legislature intended it to apply to all dealership agreements into Wip ‘entered thereafter.’ As clear, perfurth 5, 1974 makes the April mere continuance after of dealership a arrangement of indefinite duration not does constitute a dealership agreement ‘entered into after’ that date. Similarly, an automatic contemplated renewal under the of terms a an dealership agreement agreement is not ‘entered

164 terms of original under the bring dealership into’ so as to (7th Cir.1985) (internal citation Act.”), F.2d aff'd, 761 345 Assocs., Simpson Inc. Elec. omitted); & E.A. Dickinson (“The (E.D.Wis.1981) 4, 1974, 1241, 1247 June Co., F.Supp. to not, however, or an amendment a new contract letter was of a routine was instead notification contract. It existing line which was available product defendant’s modification parties It anticipated was promotion. plaintiff changes that such agreement time of their oral in 1956 at the time, of the course their from time to would occur of such modifications of a number years dealings twenty-five made, not a it did change time such did occur. Each existing of the contract a or amendment constitute renewal 4, 1974, Thus, letter does not the June parties. between relationship to the between of Ch. 135 justify application Corp., Inc. v. Chrysler Easterby-Thackston, parties.”); (“Plaintiffs (D.S.C.1979) characterization F.Supp. contract,’ ‘new activity constituting as June this beyond the limits which meaning of that term strains the rights no in the change There was willing project. court is Chrysler as a result of Easterby-Thackston or duties Nor was the consent to the contract. becoming party Chrysler party. for the substitution necessary plaintiff contemplated Furthermore, specifically contract original situation, ‘may assign Chrysler Motors very stating this Since Chrysler Corporation.’ agreement only the original the terms of exclusively under parties operated Act, the of this prior passage as amended agreement, does not constitute by Chrysler, assumption of this Nissan, ”); F.Supp. McKay ‘new contract.’ cf. (“A apply that the Act does determination McKay’s fully dispose of does not agreement and amendments into a renewal entered however. complaint, (and 3, 1989, any the Act long after April amendments) Thus, if any came into effect. relevant 3, 1989, may McKay April after violations occurred alleged retroactivity no Act because there is a claim under the pursue Co., Oil Petroleum Co. v. Paradee Phillips problem.”); (Del.1975) 611-12 (holding year that contract for one statute, term made before the effective date of the but subse- quently year by renewed each the parties, was sufficient statute). to subject circumstances the contract to the IV. stated, For the reasons I would answer the certified ques- tion by adopting the “fresh decision” standard of Bitronics. Such a standard justice does the most bargains considerations exchanged between parties at the time of con- tracting and objectively-viewed expectations continued the parties thereafter. Nothing Majority opinion or the briefs of the parties indicates that the between John Deere and Reliable Tractor was based any under- standing other than an open-ended contract terminable at will notice, either party days’ with 120 even after the cause for termination standard was enacted. Legislature has not directed otherwise with clarity. The courts should not alter the vested rights open-ended an by incorporating post-agreement agreements, statutes into the requisite absent showing of a Judges “fresh decision.” Murphy and Cathell authorize me to state they join dissenting opinion.

957 A.2d 610 In re Petition for REINSTATEMENT Kyriakos

OF P. MARUDAS. 23, Sept. Term,

Misc. Docket AG No. Appeals Maryland. Court of

Oct. ORDER This matter came before this Court on the Petition for Reinstatement Kyriakos P. Marudas to be reinstated Bar of Maryland.

Case Details

Case Name: JOHN DEERE CONSTRUCTION AND FORESTRY CO. v. Reliable Tractor, Inc.

Court Name: Court of Appeals of Maryland

Date Published: Sep 15, 2008

Citation: 957 A.2d 595

Docket Number: Misc. No. 12 Sept. Term, 2007

Court Abbreviation: Md.