FI LED

U.S. COURT OF APPEALS

ELEV ENT H CI RCUI T
APRI L 28, 201 0

J OHN LEY
CLERK [DO NOT PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS

FOR THE ELE VENTH CIRCUIT

__ __ __ __ __ __ __ __ __ __ __ __

No. 0 9- 16 15 2

Non -Arg um en t Ca le nd ar

__ __ __ __ __ __ __ __ __ __ __ __

D.C. Dock et No. 0 7- 00 04 3- CV-HL-7

RELIABLE TRACTOR, INC.,
a Geo rg ia Co rp or at io n d.b .a. Sta ffo rd

,

Pl ai nt iff -Ap pe ll ee,

ve rs us

JOHN DEERE CONSTRUCTION & FORESTRY C OMPANY,
a Del aware co rp or at io n a s s uc ces so r to Jo hn Deere I nd us tri es Equ ip m en t Co m

pa ny,

Defen da nt -Ap pe ll an t.

__ __ __ __ __ __ __ __ __ __ __ __
App eal fro m

th e Uni te d S ta te s Di st ric t Co ur t fo r th e Mi dd le Dis tri ct of Ge or gi a

__ __ __ __ __ __ __ __ __ __ __ __ (Ap ril 28 , 20 10 )

Befo re BLACK, PRYOR an d C OX, Circ ui t J ud ge s.

PER CURI AM:R e l i a b l e Tract or , In c. an d Jo hn Deere Co ns tru ct io n & Fo res try Co m pa n y

ex ecu te d two de al er ag reem en ts in 19 84 at Jo hn Deere ’s he ad qu art ers in Mar y la nd

.

The ag reem en ts ap p o i n te d Rel ia bl e Tract or as a de al er of Jo hn Deere fo res try an d

ut il it y eq ui pm en t fo r a fo u rte en co un ty reg io n in Geo rg ia

. The de al er ag reem en ts

were o pe n- en de d— th ey

di d n ot co nt ai n a te rm of du rat io n a nd all owe d e it he r pa rty

to te rm in at e th e ag reem en ts wit ho ut cau se on 12 0 da y s no ti ce. At th e ti m e th e

co nt ract s were ex ecu te d, th e 12 0 da y no ti ce pr ov is io n was en fo rcea bl e un de r

Mar y la nd law.

In 1 98 7, Mar y la nd en act ed th e Equ ip m en t Deal er Co nt ract Act. Md

. Co de

Ann

., Co m

. Law § 19 -1 01 et

. se q. Thi s Act was am en de d in 19 98 to pr ov id e th at

eq ui pm en t su pp li ers , li ke Jo hn Deere

, m ay no t te rm in at e a de al er ag reem en t wit ho ut

go od cau se

. Id

. § 19 -1 03

. Fro m 19 84 th ro ug h Mar ch 20 07

, Jo hn Deere an d Rel ia bl e

Tract or pe rfo rm ed th ei r ob li ga ti on s un de r th e de al er ag reem en ts

, an d ne it he r so ug ht

te rm in at io n. On Mar ch 27

, 20 07

, Jo hn Deere ga ve no ti ce to Rel ia bl e Tract or th at it

wou ld te rm i n a t e t h e ag reem en ts in 12 0 da y s pu rs ua nt to th e ag reem en ts ’ no -cau se

pr ov is io n. Rel ia bl e Tract or fil ed th is su it ag ai ns t Jo hn Deere in th e Uni te d St at es

Dis tri ct Co ur t fo r th e Mi dd le Dis tri ct of Geo rg ia

, as se rti ng a br each of co nt ract cl ai m

an d a cl ai m fo r de cl arat or y rel ie f se ek in g to de cl are Jo hn Deere ’s at te m pt to te rm in at e

th e d eal er ag reem en ts un la wfu l an d v oi d u nd er t he Marylan d Act

.

2Rel ia bl e Tract o r m ov ed fo r su m m ary jud gm en t on it s cl ai m fo r de cl arat or y

rel ie f, an d Jo hn Deere fil ed a m ot io n to di sm is s Rel ia bl e Tract or ’s co m pl ai nt

.

Rel ia bl e Tract or arg ue d th at th e at te m pt e d t e r mina ti on of th e de al er ag reem en ts

vi ol at ed th e Mar y la nd Act’s go od cau se pr ov is io n. Jo hn Deere co un te red : (1 ) th at th e

Act do es no t ap pl y to th e de al er ag reem en ts be cau se Geo rg ia la w, no t Mar y la nd la w,

ap pl ie s to th e 19 84 ag reem en ts ; (2 ) ev en if Mar y la nd la w ap pl ie s, th e go od cau se

pr ov is io n in th e Act on ly ap pl ie s to co nt ract s ent ered in to aft er t he effe ct iv e d at e of

th e Act; (3 ) ev en if th e go od cau se pr ov is io n ap pl ie s, it s ap pl ic at io n wou ld vi ol at e th e

Co nt ract s Cl au se , Due Pro ces s Cl au se , an d Fu ll -Fai th -an d- Cred it Cl au se of th e

Uni te d St at es Co ns ti tu ti on ; an d (4 ) ev en if ap pl ic at io n of th e go od cau se pr ov is io n

wou ld no t vi ol at e th e Co ns ti tu ti on , th ere are ge nu in e is su es of m a t e ria l fact as to

whe th er J oh n Dee re d id in fact ha ve go od cau se to ter m in at e th e ag reem en ts

.

The di st ri c t c o u r t cert ifi ed to th e Mar y la nd Co ur t of App eal s th e qu es ti on

whe th er th e go od cau se pr ov is io n of th e Act ap pl ie s t o co nt ract s ex ecu te d be fo re it

was en act ed i n 19 98

. The Mar y la nd co ur t an swe red th at th e Act di d ap pl y to th e

de al er ag reem en ts

. The co ur t r e c o g ni zed th at un de r Mar y la nd la w st at ut es are

pr es um ed to op erat e p ro sp ect iv el y un le ss th ere is ev id en ce of a co nt rary in te nt

, an d

it co nc lu de d th at th e Act, as ap pl ie d t o t h e a g reem en ts in th is cas e, ap pl ie d

pr os pe ct iv el y as op po se d to ret ro sp ect iv el y

. The co ur t in te rp ret ed th e ag reem en ts no t

3as co nt ract s wit h an in de fin it e te rm , bu t as a se rie s of 12 0 da y co nt ract s th at ren ewed

whe ne ve r th e pa rti es co nt in ue d to pe rfo rm th ei r ob li ga ti on s wit ho ut an no un ci ng th at

th ey in te nd ed to ex erci se th ei r rig ht s to te rm in at e un de r th e 12 0 da y no ti ce pr ov is io n.

The co ur t ex pl ai ne d th at “ th e co nt ract s, by th ei r te rm s, co ul d be te rm in at ed by ei th er

pa rty at an y ti m e wit ho ut go od cau se , m erel y by pr ov id in g 1 20 da y s no ti ce. It is

lo gi cal

, th en , th at ne it he r pa rty co ul d reas on ab ly ex pe ct th e co nt ract s to co nt in ue fo r

m or e th an 12 0 da y s fro m an y gi ve n da te .” (R.1 -3 7 at 8.) It reas on ed th at on ce th e

st at ut e was en act ed in 19 98

, Jo hn Deere an d Rel ia bl e Tract or ha d co ns tru ct iv e no ti ce

of it s ex is te nc e. And

, “ [ b ]y c o n t i n ui ng to pe rfo rm th ei r ob li ga ti on s un de r th e

co nt r act s wit ho ut pr ov id in g no ti ce of te rm in at io n, th e pa rti es effe ct iv el y ren ewed

th ei r co nt ract s co ns is te nt wit h th e ap pl ic ab le la w in effe ct at th e ti m e.” ( Id .) So

, th e

co ur t co nc lu de d th at th e fir st ren ewal of th e de al er ag reem en ts th at oc cu rred 12 0 da y s

a f t er th e go od cau se pr ov is io n be cam e la w bo un d Jo hn Deere to co m pl y wit h t h a t

pr ov is io n. (

Id

. )

W it h th e be ne fit of th e op in io n of th e Mar y la nd Co ur t of App eal s, th e di st ric t

co ur t co ns id ered Rel ia bl e Tract or ’s m ot io n fo r su m m ary jud gm en t an d Jo hn Deere ’s

m ot io n to di sm is s. Jo hn Deere arg ue d th at if th e Mar y la nd co ur t’s i nt erp ret at io n of

th e ag reem en ts as a se rie s of 12 0 da y co nt ract s was to be ad op te d by th e di st ric t co ur t,

th e co ur t m

us t fi nd th at th e Act co ul d n ot ap pl y to th e ag reem en ts be cau se in 19 91

,

4Jo hn Deere ha d m ov ed it s he ad qu art ers fro m Mar y la nd to Ill in oi s. Acco rd in g to Jo hn

Deere

, on ce it s he ad qu art ers was m ov ed

, th e ren ewal s of th e ag re e men t s co ul d no t

ha ve oc cu rred in M a r y la nd be cau se ne it he r pa rty ha d a pr es en ce in th e st at e, an d

un de r Geo rg ia ch oi ce of la w ru le s, Mar y la nd la w wou ld no t ap pl y

. Jo hn Deere al so

reas se rte d th at ap pl ic at io n of th e Mar y la nd Act’s go od cau se pr ov is io n wou ld vi ol at e

th e Co ns ti tu ti on an d ev en if it wou ld no t

, ge nu in e is su es of m at eri al fact wou ld

pr ecl ud e th e gr an t of su m m ary jud gm en t to Rel ia bl e Tract or

. The di st ric t co ur t

di sa gr eed

. It ex pl ai ne d th at th e Mar y la nd co ur t ap pl ie d a “ le ga l fic ti on ” to co nc lu de

th at th e ag reem en ts were a se rie s of 12 0 day co nt ract s. In act ua li ty, th e ag reem en ts

were ex ecu te d on e ti m e, in Mar y la nd

, in 19 84

. The refo re, th e c o u r t he ld

, un de r

Geo rg ia ’s ch oi ce of la w ru le s, Mar y la nd la w ap pl ie d. (R.1 -4 7 at 11 .) The co ur t wen t

on to no te th at it was bo un d to acce pt th e Mar y la nd co ur t’s h o l d in g th at th e Act’s

go od cau se pr ov is io n app li ed to th e ag reem en ts

. So

, it he ld th at an at te m pt by Jo hn

Deere to te rm in at e th e ag reem en ts wit ho ut cau se wou ld vi ol at e th e Act. And

, be cau se

th e Mar y la nd co ur t co nc lu de d th at th e Act ap pl ie d pr os pe ct iv el y , no t ret ro sp ect iv el y ,

th e di st ric t co ur t he ld th at ap pl ic at io n of th e go od cau se pr ov is io n di d no t vi ol at e th e

Uni te d St at es Co ns ti tu ti on

. ( Id

. at 12 -1 3.) Fu rth er, it he ld th at th ere were no ge nu in e

is su es of m at eri al fact as to whe th er Jo hn Deere po ss es se d go od c a u s e to te rm in at e

th e ag reem en ts

. (

Id

. at 19

. ) The refo re, th e co ur t gr an te d Rel ia bl e Tract or ’s m ot io n

5fo r su m

m ary jud gm en t as to it s cl ai m fo r de cl a r a t or y rel ie f, an d it de ni ed Jo hn

Deere ’s m ot io n to di sm is s. ( Id

. at 22 .) Jo hn Deere fil ed th is in te rlo c u to ry ap pe al

pu rs ua nt to 28 U.S.C. § 1 29 2.

S ub ject m at te r juri sd ic ti on in th is cas e is ba se d on di ve rs it y of ci ti zen sh ip

.

Thu s, th e fo ru m st at e’s su bs ta nt iv e la w ap pl ie s, in cl u d i n g i t s c h oi ce of la w ru le s.

Kl ax on Co

. v. St en to r Elec

. Mfg

. Co

. , 31 3 U.S. 48 7, 61 S. Ct

. 10 20 (1 94 1)

. Geo rg ia

,

th e fo ru m st at e, ap pl ie s th e le x lo ci co nt ra ct us do ct rin e in de t e r m in in g wha t st at e’s

la w ap pl ie s to co nt ract s. The le x lo ci ru le pr ov id es th at co nt ract s “ are to be go ve rn ed

. . . by th e la w of t he pl ace wh ere th ey were m ad e, ex cep t where it ap pe ars fro m th e

co nt ract it se lf th at it is to be pe r f o r med i n a S t a te ot he r th an th at in whi ch it was

m ad e, in whi ch cas e

. . . t h e la ws of th at si st er St at e wil l be ap pl ie d.” Co nv er gy s

Co rp

. v. Kee ne r , 58 2 S.E.2d 84

, 86 n.1 (Ga. 20 03 ) (q uo ta ti on s an d ci ta ti on s om it te d)

.

W e as su m e ar

gu en do th at Rel ia bl e Tract or is co rrec t th at Mar y la nd la w ap pl ie s to th e

a g r e em en ts at is su e. And , we are bo un d to acce pt th e Mar y la nd Co ur t of A p p e a l s ’

co nc lu si on th at , un de r Mar y la nd law, t he Act’s g oo d c au se pro vi si on ap pl ie s to th e

ag reem en ts

. Eve n so , we co nc lu de th at ap pl ic at io n of th e go od cau se pr ov is io n

wou ld vi ol at e th e Co nt ract s C la us e o f th e Uni te d S ta te s C on st it ut io n.

Arti cl e I, § 10 of th e Uni te d St at es Co ns ti tu ti on pr ov id es th at no st at e sh al l pa ss

an y la w imp a i r i n g t he ob li ga ti on of co nt ract s. In de te rm in in g whe th er a st at e la w

6vi ol at es th e Co nt ract s Cl au se , we as k “ whe th er th ere is a co nt rac t u a l r e la ti on sh ip

,

whe th er a ch an ge in la w i mp a i r s th at co nt ract ua l rel at io ns hi p, an d whe th er th e

im pa irment is su bs ta nt ia l.” Gen er al Mot or s Co rp

. v. Romei n , 50 3 U.S. 18 1, 18 6, 11 2

S. Ct

. 11 05

, 11 09 (1 99 2)

. B e cau se we are as ke d to in te rp ret th e Uni te d St at es

Co ns ti tu ti on , fed eral la w co nt ro ls th is in qu iry. “ The qu es ti on whe th er a co nt ract was

m ad e is a fed eral qu es ti on fo r pu rp os es of Co nt ract Cl au se an al y si s, an d whe th er it

t u r n s o n is su es of ge ne ral or pu rel y lo cal la w, we can no t su rren de r th e d u t y t o

ex erci se ou r own jud gm en t.” Id

. at 18 7, 11 2 S. Ct

. at 11 10 (q uo ta ti on s an d ci ta ti on s

om it te d)

. W hi le th e Mar y la nd Co ur t of App eal s he ld th at fo r pu rp os es of Mar y la nd

la w th e de al er ag reem en ts in th is cas e sh ou ld be co ns id ered a se rie s of 12 0 co nt ract s,

we are no t bo un d to ad op t th is in te rp ret at io n. Rat he r , w e m us t co nd uc t an

in de p e n d e n t fed eral la w an al y si s of th e ag reem en ts fo r pu rp os es of th e Co nt ract s

Cl au se in qu iry.

The pl ai n la ng ua ge of th e de al er ag reem en ts de m on st rat es th at th ey were op en

en de d c on tra ct s wi th no ter m of d ur at io n t ha t co ul d b e te rm in at ed wit ho ut cau se by

ei th er pa rty on 12 0 da y s no ti ce. W e se e no reas on to co nc lu de

, as th e Mar y la nd co ur t

di d, th at co nt in ue d pe rfo rm an ce un de r th e co nt ract s be y on d th e 12 0- da y no ti ce pe rio d

eq ua te d to th e m ak in g of a ne w c on tra ct

. Rat he r, we gi ve effe ct to th e te rm s of th e

ag reem en ts th em se lv es an d co nc lu de th at th ey were ex ecu te d on ce, in 19 84

, an d th at

7th e or ig in al ag reem en ts co nt in ue d to be in fo rce un ti l Jo hn De e r e a tt em pt ed to

ex erci se it s rig ht s un de r th e 12 0 no ti ce pr ov is io n in 20 07

. Se e 11 W ILLI S T O N O N

C O N T R A C T S § 32 :3 (4 th ed .) (“ The p l a i n , c o m m on or no rm al m ean in g of la ng ua ge

wil l be gi ve n to th e wor ds of a co nt ract un le ss th e c i r c um st an ces sh ow th at in a

pa rti cu la r cas e a s pe ci al m ean in g s ho ul d b e at ta ch ed to th em .”).

Bec au se th e o rig in al 19 84 de al er ag reem en ts were in fo rce in 19 98 whe n t he

Mar y la nd Act’s go od cau se pr ov is io n be cam e la w, th e Act effec te d a ch an ge in la w

th at im pa ire d an ex is ti ng co nt ract ua l r e l a ti on sh ip —i t li m it ed a co nt ract ua l rig ht to

te rm in at e th e de al er ag reem en ts

. And

, we co nc lu de th at th is im pa irment was

su bs ta nt ia l. A pr ov is io n gr an ti ng th e rig ht to te rm in at e a co nt ract wit ho ut cau se is a

m at eri al pr ov is io n of th at co nt ract

. Se e For na ri s v. Rid ge To ol C

o

. , 4 2 3 F

. 2d 56 3,

56 8 (1 st Ci r. 19 70 ), re v’d on ot he r gr ou nd s 40 0 U.S. 41

, 91 S. Ct

. 15 6 (h ol di ng th at

a la w co nv ert in g a co nt ract ua l rel at io ns hi p te rm in ab le by ei th er pa rty wit ho ut cau se

in to on e whi ch can be te rm in at ed on ly un de r cert ai n co nd it io ns was a “ ch an ge of

gr eat m ag ni tu de ” th at vi ol at ed th e Co nt ract s Cl au se ). The Mar y la nd Act im pa irs th e

co nt ract ua l rig ht of on e pa rty, Jo hn Deere

, to te rm in at e th e co nt ract wit ho ut cau se on

12 0 da y s no ti ce. App lyi n g th e Act wou ld effe ct iv el y ex te nd th e de al er ag reem en ts

in de fin it el y un le ss Jo hn Deere can m eet th e te rm s of th e Act’s go od cau se pr ov is io n.

W e co nc lu de th at th is wou ld su bs ta nt ia lly im pa ir the co nt ract ua l rel at io ns hi p be twee n

8Jo hn Deere an d Rel i a b l e Tr a c to r an d wou ld vi ol at e th e Co nt ract s Cl au se

. Se e

Mor ga n v. Kemp er In s. Co s. , 75 4 F.2 d 14 5, 14 7- 48 (4 th Ci r. 19 85 ) ( h o ld in g th at a

ret ro act iv e ap pl ic a t i o n o f a st at ut e im pa iri ng an in su rer’s co nt ract ua l rig ht to

te rm in at e an ag en t wit ho ut c au se vi ol at ed th e Co nt ract Cl au se ); Gar ri s v. Han ov er

In s. Co

., 63 0 F.2 d 10 01

, 10 06 (4 th Ci r. 19 80 ) (s am e). W e th eref or e rev ers e th e gr an t

of su m m ary jud gm en t fo r Rel ia bl e Tract or , an d rem an d fo r en try of a jud gme n t in

fav or of J oh n Dee re.

REVERSED AND REMANDED.

9