Opinion ID: 626928
Heading Depth: 2
Heading Rank: 2

Heading: Engine and Transmission Assembly Claims

Text: Dealers [5] submit that the District Court erred in denying their motion for summary judgment and granting Ford's motion for summary judgment on certain engine and transmission assembly reimbursement claims. A separate provision of the NJFPA governs engine and transmission repairs, [6] recognizing that manufacturers often provide these expensive parts to their dealers on an as-needed basis, rather than requiring the dealers to keep them in stock. When the manufacturer follows that procedure in connection with a warranty service, the NJFPA does not require full retail reimbursement; instead, it requires the franchisor to reimburse the franchisee at 30% of the part's wholesale price. N.J. Stat. Ann. § 56:10-15(e). Dealers claim that Ford failed to reimburse them for certain engine and transmission assembly repairs. The District Court's grant of summary judgment was proper for two reasons. First, the claims were procedurally barred because the Dealers failed to properly plead them. The well-established notice pleading standard under Federal Rule of Civil Procedure 8(a) requires that the complaint ... `give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests.' Thomas v. Independence Twp., 463 F.3d 285, 295 (3d Cir.2006) (quoting Conley v. Gibson, 355 U.S. 41, 47, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)). In their complaint, the Dealers stated that Ford has refused to reimburse dealers at retail for engine and transmission assemblies. Second Amended Complaint and Demand for Jury Trial, at 13, Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 2006 WL 1098178 (D.N.J. March 31, 2006) (No. 02-4146) (emphasis added). And Ford settled with the Dealers on these claims of underpayment. However, like the District Court, we cannot find any language in the complaint that alleges Ford's complete failure to pay any amount for certain engine and transmission assemblies. Because the complaint failed to provide notice to Ford regarding its alleged failure to reimburse the Dealers for these repairs, the District Court properly granted summary judgment. The Dealers submit that even if Ford's alleged complete failure to pay were not raised in the pleadings, these claims, raised in the motion for summary judgment, should be treated in all respects as if raised in the pleadings because the issue was tried by the parties' express or implied consent. Fed.R.Civ.P. 15(b)(2). Assuming, without holding, that Rule 15(b) applies at the summary judgment stage, [7] the Dealers still failed to prove that Ford expressly or impliedly consented to try the engine and transmission assembly claims. Because there is no evidence of Ford's express consent, the Dealers contend that Ford impliedly consented to try the claims. A finding of implied consent depends on three factors: whether the parties recognized that the unpleaded issue entered the case at trial, whether the evidence that supports the unpleaded issue was introduced at trial without objection, and whether a finding of trial by consent prejudiced the opposing party's opportunity to respond. Douglas v. Owens, 50 F.3d 1226, 1236 (3d Cir.1995) (quoting Portis v. First Nat'l Bank, 34 F.3d 325, 332 (5th Cir.1994)). First, there is no evidence the parties recognized that the engine and transmission claims for nonpayment entered into the litigation. The complaint never alleged the nonpayment claims, and none of the court proceedings clearly referenced the claims. Thus, the parties never had an opportunity to recognize the nonpayment claims. Under the second factor, there is implied consent to litigate an issue if there is no objection to the introduction of evidence on the unpleaded issue, as long as the non-objecting party was fairly apprised that the evidence went to the unpleaded issue. Francois v. Francois, 599 F.2d 1286, 1294 n. 6 (3d Cir.1979) (citation omitted). But the documents presented by the Dealers here consistently refer to the claim that Ford under-reimbursed for the repairs, rather than the claim that Ford failed to reimburse at all. For example, the District Court's September 28, 2007 Order denying summary judgment on the engine and transmission claims and permitting further discovery stated Plaintiffs assert, on information and belief, that Ford failed to reimburse dealer at the 30% retail rate.  Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., No. 02-4146, 2007 WL 2892943, at  (D.N.J. Sept. 28, 2007) (emphasis added). Discovery requests submitted by Ford also referred to claims of under-reimbursement, rather than nonpayment. See, e.g., Ford Motor Company's Fourth Request for Production of Documents to Plaintiffs at 5 Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 2007 WL 2892943, at  (D.N.J. Sept. 28, 2007) (No. 02-4146) (requesting [a]ll documents relating to any warranty repair involving a vehicle engine and/or transmission performed by Plaintiff, which Plaintiff contends Ford has under reimbursed Plaintiff). In addition, when Ford's counsel acknowledged a potential settlement of the claims during the January 25, 2010 hearing, counsel was specifically referring to instances where Ford didn't pay [the reimbursement rate] at 30 percent. Transcript of Proceedings at 36, Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., 2010 WL 624877 (D.N.J. February 22, 2010) (No. 02-4146). Even if some language in the record may be broad enough to cover both the nonpayment and under-reimbursement claims, there is no implied consent where, as here, evidence relevant to the new claim is also relevant to the claim originally pled, because the defendant does not have any notice that the implied claim was being tried. Douglas, 50 F.3d at 1236 (citations omitted). Thus, based on the record, we cannot say that Ford was fairly apprised that the evidence went to the unpleaded issue regarding nonpayment. Francois, 599 F.2d at 1294 n. 6. Finally, the addition of a new claim after eight years of litigation and one week before the trial would have prejudiced Ford by requiring it to conduct substantial additional discovery when much of the relevant evidence was likely lost. See Douglas, 50 F.3d at 1236 (finding prejudice when district court permitted plaintiff to assert new theory of liability at such a late stage in the proceedings, without defendant having had the opportunity to defend against this new claim). Therefore, we cannot hold that Ford impliedly consented to try the engine and transmission nonpayment claims. The District Court's grant of summary judgment was also proper because the Dealers' failure to submit any written payment claims to Ford barred these engine and transmission nonpayment claims. The Dealers argue that written claims were unnecessary because Ford's supplying of replacement engine and transmission parts to them at no cost provided adequate notice and Ford should have automatically provided the 30% reimbursement. We reject this argument because under the NJFPA, the franchisor may require the franchisees seeking warranty reimbursement claims to reasonably substantiate the claim in accordance with reasonable written requirements of the motor vehicle franchisor, provided that the motor vehicle franchisee had been notified of the requirements prior to the time the claim arose and the requirements were in effect at the time the claim arose. N.J. Stat. Ann. § 56:10-15(f). Thus, Ford had the authority to require the Dealers to file written claims, and it did so under its Sales and Service Agreement. The Agreement, which governs the relationship between Ford and its franchisees, unambiguously states that the Dealer shall submit claims to the Company for reimbursement for the parts and labor used in performing warranty [repairs.] ... The Dealer shall maintain adequate records and documents supporting such claims in accordance with the provisions of the Warranty Manual. Joint App. at 148. Ford's Warranty Manual for the past ten years consistently indicated that written payment claims were required for reimbursement. See Decl. of Allen Taber, Ford Motor Co. Supervisor of Reimbursement Policy within the Global Warranty Analysis and Admin. Dep't at ¶ 3, 7, Liberty Lincoln-Mercury, Inc. v. Ford Motor Co., No. 02-4146, (D.N.J. Sept. 22, 2010). Given that the Dealers were adequately notified of the written claims requirement but failed to satisfy the procedure, the District Court properly granted Ford's motion for summary judgment.