Tappan Motors, Inc. v. Volvo of America Corp.

| NY | Apr 30, 1985

OPINION OF THE COURT

Memorandum.

The Appellate Division order appealed from and the prior nonfinal Appellate Division order brought up for review should be affirmed, with costs (see, CPLR 5501 [b]).

Tappan Motors brought this action in November 1979 alleging that Volvo’s threatened termination of its dealer franchise violated section 197 of the General Business Law, which prohibited such termination “except for cause.”^* After a nonjury trial, the court enjoined Volvo from terminating the franchise, finding that Tappan had complied with the obligations of the franchise agreement. Reversing, on the law and the facts, the Appellate Division interpreted section 197 as “precluding a distributor such as Volvo from terminating a franchised dealer either in bad faith or in the absence of good cause shown”. (85 AD2d, at p 625.) However, the majority considered the termination justified in light of several deficiencies in Tappan’s performance.

We conclude that the weight of the evidence more nearly comports with the holding of the Appellate Division that Volvo had good cause to terminate the dealership because of the insufficiency of Tappan’s performance, particularly breach of its contractual duty to maintain on premises an adequate parts inventory to meet the current and reasonably anticipated service requirements of its customers. Accordingly, we need not determine whether section 197 imposed a “good cause” requirement or, as Volvo claims, protected only against arbitrary and capricious terminations.

Chief Judge Wachtler and Judges Jasen, Simons and Kaye concur; Judges Meyer and Alexander dissent and vote to reverse upon the ground that the weight of the evidence more nearly comports with the findings made by Supreme Court in the original decision on the analysis advanced in the dissenting memorandum of Justice Vito J. Titone at the Appellate Division (85 AD2d 624, 626-633).__

Order appealed from and order brought up for review affirmed, with costs, in a memorandum.

* The Legislature has since enacted article 17-A of the Vehicle and Traffic Law (the Franchised Motor Vehicle Dealer Act), including standards for dealer termination, which became effective July 1, 1984.