No 

No. 98-402

IN THE SUPREME COURT OF THE STATE OF MONTANA

1999 MT 21

SHAMROCK MOTORS, INC.,

Petitioner and Respondent,

v.

FORD MOTOR COMPANY,

Respondent and Appellant.

APPEAL FROM: District Court of the Second Judicial District,

In and for the County of Silver Bow,

The Honorable John W. Whelan, Judge presiding.

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COUNSEL OF RECORD:

For Appellant:

Robert M. Carlson; Corette, Pohlman & Kebe, Butte, Montana

George E. Feldmiller; Berkowitz, Feldmiller, Stanton, Brandt, 

Williams & Stueve, Kansas City, Missouri

For Respondent:

James T. Harrison, Jr.; Harrison, Loendorf, Poston & Duncan,

Helena, Montana

Submitted on Briefs: December 30, 1998

Decided: February 11, 1999

Filed:

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__________________________________________

Clerk

Justice W. William Leaphart delivered the Opinion of the Court.

¶1. This is an appeal from the District Court's reversal of a decision by the Motor 

Vehicle Division of the Montana Department of Justice (Motor Vehicle Division) 

ruling that Appellant Ford Motor Company (Ford) had good cause to terminate the 

automobile dealer franchise of Shamrock Motors, Inc. (Shamrock). Ford's notice of 

intent to terminate the dealership was based upon Shamrock's unauthorized sale of 

80% of its stock without Ford's knowledge or consent, which was in violation of the 

Ford Sales and Service Agreement (FSSA). The Motor Vehicle Division issued a 

decision holding that "Ford Motor Company has carried its burden of proof under 

Montana law to establish that good cause exists to terminate its franchise with 

Shamrock Motors, Inc., under the standards established in Mont. Code Ann. § 61-4-

205 to 61-4-207."

¶2. Shamrock appealed the Motor Vehicle Division's decision by filing a petition for 

judicial review with the Montana Second Judicial District Court, Silver Bow County. 

Based on diversity of citizenship, Ford removed the case to the United States District 

Court. The United States District Court reversed the Motor Vehicle Division's 

decision, and Ford appealed to the Ninth Circuit Court of Appeals.

¶3. While the matter was pending before the Ninth Circuit, Shamrock, in January of 

1997, sold the dealership to Brooks Hanna Ford, Inc. (Brooks Hanna), and resigned 

as a Ford dealer. Ford executed a new FSSA with Brooks Hanna, the new Ford 

dealer. The Ninth Circuit then vacated the United States District Court's decision on 

the ground that the court lacked jurisdiction, and remanded the case back to state 

court. In February, 1998, Shamrock filed a second petition for judicial review. In 

response, Ford filed a motion to dismiss based on mootness and lack of standing, 

relying on Shamrock's sale of the dealership and the fact that Shamrock was no 

longer a Ford dealer.

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¶4. The District Court found in favor of Shamrock and, without discussion, denied 

Ford's motion to dismiss. Relying on § 61-4-207(2)(a), MCA, the District Court 

concluded the franchise could not be terminated as the result of a sale of 80% of the 

franchisee's stock. It is from that decision that Ford appeals.

Issues Presented for Review 

¶5. 1. Whether the District Court erred by failing to grant Ford's motion to dismiss 

Shamrock's petition for judicial review on the grounds of mootness or lack of 

standing once Shamrock had sold its franchise.

¶6. 2. Whether the District Court erred in holding that Shamrock's change in 

ownership, undertaken without knowledge or consent of Ford, could not, as a matter 

of law, be good cause for termination of the franchise.

Factual Background

¶7. In November, 1985, Ford and Shamrock entered into an FSSA which established 

Shamrock as an authorized Ford dealer in Butte, Montana. The FSSA stated that 

Shamrock was owned by Patrick Lyons (Lyons) and Charles Canty (Canty), and 

provided that Lyons would "have full managerial authority" on behalf the Shamrock 

dealership. 

¶8. The FSSA provided that Shamrock had to obtain Ford's approval of any change 

in ownership or managerial authority. The FSSA required that Shamrock "give 

[Ford] prior notice of any proposed change in the said ownership or managerial 

authority." Further, it stated that Ford "has the right to approve or decline to 

approve any prospective purchaser as to his character, automotive experience, 

management, capital and other qualifications . . . as an authorized dealer." The 

FSSA went on to provide that if Shamrock failed to obtain Ford's "prior written 

consent" to a "direct or indirect [change in] ownership or operating management," it 

would be "so contrary to the intent and purpose of this agreement as to warrant its 

termination or nonrenewal." 

¶9. On May 11, 1993, Ford was informed for the first time that Lyons and Canty had 

sold 80% of Shamrock's stock to Merle Rhoades (Rhoades). This sale had been 

undertaken without prior notice to Ford and without Ford's prior written consent. 

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Ford learned of the sale at a meeting to discuss Shamrock's participation in a Ford 

dealer development program. Upon learning of the sale, Ford's representative told 

Lyons that the sale was a breach of the FSSA. Rhoades, the new owner of Shamrock, 

took the position that Montana law made the provisions of the FSSA relating to a 

change in ownership unenforceable. On September 29, 1993, Ford sent a notice of its 

intention to terminate Shamrock's franchise to the Montana Department of Justice 

Title and Registration Bureau. 

¶10. Shamrock exercised its right to both an internal and administrative review of 

Ford's decision to terminate the franchise. Shamrock's initial challenge of the 

termination decision was reviewed and dismissed by Ford's internal Dealer Policy 

Board in February, 1994. Shamrock's administrative appeal to the Motor Vehicle 

Division was concluded in June, 1994, when the Division issued an order upholding 

Ford's termination decision and finding that Ford had established good cause for 

termination.

¶11. Shamrock appealed the administrative decision by filing a petition for judicial 

review with the Montana Second Judicial District Court. After removal to federal 

court, the Ninth Circuit held that the Federal District Court lacked jurisdiction to 

reverse the administrative decision by the Motor Vehicle Division and the matter was 

remanded back to the Montana state court for appellate review. Shamrock Motors, 

Inc. v. Ford Motor Co. (9th Cir. 1997), 120 F.3d 196, 200.

¶12. Because of the pendency of this litigation, Shamrock's franchise was never 

terminated by Ford. Rather, Shamrock continued to operate as an authorized Ford 

representative for nearly four years. In January, 1997, while the appeal was pending 

before the Ninth Circuit, Shamrock sold the dealership to Brooks Hanna. That sale 

was approved by both Lyons as President of Shamrock and Rhoades as a 

stockholder. Ford approved of the sale and executed an FSSA with Brooks Hanna. 

As part of the sales transaction, Shamrock resigned as a Ford dealer.

¶13. Following its voluntary resignation as a Ford dealer and its sale of the 

dealership to Brooks Hanna, Shamrock filed a second petition for judicial review 

with the Montana Second Judicial District Court. In its petition for review, 

Shamrock asked that the District Court enter an order that there is "no legitimate 

cause for termination of the franchise." Ford filed a reply and motion to dismiss 

contending that, since Shamrock had sold the Ford franchise, Shamrock no longer 

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had a franchise or contract interest at issue and, thus, it lacked standing and its 

petition for review was moot.

¶14. The District Court denied Ford's motion to dismiss and held that Shamrock's 

sale of 80% of its stock without Ford's prior knowledge or approval was not good 

cause for termination under § 61-4-207(2)(a), MCA. Some three months later, 

Shamrock filed a separate suit against Ford seeking recovery for damages allegedly 

caused by Ford's termination of the franchise. Cause No. DV-98-161, Second Judicial 

District, Silver Bow County.

Discussion

¶15. 1. Whether the District Court erred by failing to grant Ford's motion to dismiss 

Shamrock's petition for judicial review on the grounds of mootness or lack of 

standing once Shamrock had sold its franchise.

¶16. Although Ford filed a motion to dismiss the petition for judicial review for 

mootness or lack of standing, the District Court did not directly rule on the motion. 

Rather, the court addressed the merits of Shamrock's petition for review and 

concluded:

The final decision of the Motor Vehicle Division of the Department of Justice is, 

accordingly, REVERSED. Because this finding is dispositive of the Petition for Judicial 

Review, it does not become necessary to address the particulars of the Motion to Dismiss 

raised by the Appellee. Having reviewed the record, this Court concludes that the 

Appellee has failed to advance a persuasive argument justifying the relief requested. 

Accordingly, the Appellee's Motion to Dismiss is DENIED.

¶17. The District Court erred in not resolving the issue of mootness before 

addressing the merits of the claim. Mootness is a threshold issue which must be dealt 

with before addressing the underlying dispute.

Defendants have filed a motion to dismiss this appeal on the ground that no actual 

controversy now exists between the parties as to the matters involved in said appeal and 

that all such questions are abstract, hypothetical and moot. This motion must be passed 

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upon before any consideration of plaintiffs' contentions on the merits can be had.

Adkins v. City of Livingston (1948), 121 Mont. 528, 532, 194 P.2d 238, 240. 

¶18. In Adkins, the plaintiff had sought to enjoin the City of Livingston from 

proceeding with the creation of a special improvement district and the levying of 

assessments against the lands therein. On appeal, this Court noted that, since all the 

work related to the creation of the special improvement district had been completed, 

there remained nothing that the courts of Montana could "do by way of forbidding 

acts already accomplished." Adkins, 121 Mont. at 532, 194 P.2d at 240. The issues 

were thus moot. 

¶19. A matter is moot when, due to an event or happening, the issue has ceased to 

exist and no longer presents an actual controversy. Ruckdaschel v. State Farm 

(1997), 285 Mont. 395, 396, 948 P.2d 700, 701. A question is moot when the court 

cannot grant effective relief. Turner v. Mountain Engineering and Const., Inc. 

(1996), 276 Mont. 55, 59, 915 P.2d 799, 803. If the parties cannot be restored to their 

original position, the appeal becomes moot. Martin Development Co. v. Keeney 

Const. Co. (1985), 216 Mont. 212, 219, 703 P.2d 143, 148. 

¶20. Shamrock contends that this matter is not moot because it has a separate 

damage claim pending against Ford and unless this Court upholds the District 

Court's decision in favor of Shamrock, Ford will be in a position to seek dismissal of 

the damage claim on the basis that the Motor Vehicle Division's decision is the law of 

the case. Without expressing any views on the merits of a possible "law of the case" 

argument in the pending damage suit, we determine that the issue before us must be 

resolved in light of the fact that the present proceeding originated when Shamrock 

invoked the protections of Title 61, Chapter 4, Part 2, MCA. In determining whether 

or not that matter is now moot, we must determine whether, within the confines of 

that statutory scheme, effective relief can still be granted. Whether effective relief 

can be granted in the separate damage claim or whether the Motor Vehicle Division's 

decision becomes "law of the case" are questions not before us and which we do not 

address. 

¶21. This litigation started with Shamrock's petition for relief under § 61-4-205, 

MCA, which allowed the Motor Vehicle Division to make an initial determination as 

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to whether there was good cause for Ford to terminate its franchise with Shamrock. 

The Division determined that there was good cause. Then, during the pendency of 

the federal court litigation, Shamrock resigned its franchise and sold the dealership 

to Brooks Hanna approximately one year before it filed its second petition for 

judicial review in the District Court. Given this turn of events (i.e., Shamrock and 

Ford no longer had a franchisee/franchisor relationship), Ford rightly questioned 

whether the District Court could fashion any effective relief under Title 61, Chapter 

4, Part 2, MCA. Section 61-4-205(3), MCA, requires that the franchisor give prior 

notice of intention to terminate a franchise. Section 61-4-206(1), (2), MCA, allows the 

franchisee to file an objection to the proposed termination, which then triggers a 

hearing before the Department to determine whether or not good cause exists to 

terminate. Section 61-4-206(8), MCA, allows any party to the hearing to appeal 

under the Montana Administrative Procedure Act. However, "[t]he franchise 

agreement must continue in effect until the adjudication by the department on the 

verified complaint and the exhaustion of all appellate remedies available to the 

franchisee." Section 61-4-206(9), MCA. The purpose of the statutory scheme in Title 

61, Chapter 4, Part 2, MCA, is to maintain the status quo (i.e., to continue the 

existence of the franchise agreement) until such time as the franchisee has had prior 

notice and an opportunity to be heard on the question of good cause. Obviously, 

when Shamrock chose to sell or assign the franchise during the appellate process, the 

question of whether Ford had good cause to terminate the franchise in the first 

instance became academic and thus moot. Given the circumstances of the parties at 

the time of the appeal to District Court, the District Court was not in a position to 

restore or maintain the status quo. That is, the court could not maintain or protect 

Shamrock's status as a franchisee because Shamrock, having sold its franchise to 

Brooks Hanna, was no longer a franchisee. 

¶22. We hold that the District Court erred in not recognizing that, once Shamrock 

was no longer a franchisee, there was no effective relief under Title 61, Chapter 4, 

Part 2, MCA, that the court could fashion and, thus, Shamrock's appeal from the 

Motor Vehicle Division's holding should have been dismissed as moot. Since the 

question of mootness is dispositive, we need not address the second issue. 

¶23. Reversed. 

/S/ W. WILLIAM LEAPHART

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We concur:

/S/ JIM REGNIER 

/S/ KARLA M. GRAY

/S/ TERRY N. TRIEWEILER

/S/ JAMES C. NELSON

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