Opinion ID: 77681
Heading Depth: 2
Heading Rank: 1

Heading: Application of the Franchise Act to the Release

Text: 10 Although the district court decided this case based on the distinction between the terms waiver and release, see Edwards, No. CV-05-S-1510-NE, slip op. at 12, during oral argument, both parties conceded that the terms waiver and release can be synonymous. 6 Therefore, the Court need not review the district court's reasoning on that particular issue. Instead, the relevant inquiry concerns whether the Franchise Act permits an automobile dealer to bring a claim under the Act, despite the fact that both parties already executed a mutual release agreement in which the dealer relinquished all existing legal claims against the manufacturer in exchange for valid consideration. 11 As in any case of statutory construction, our analysis begins with the language of the statute. Hughes Aircraft Co. v. Jacobson, 525 U.S. 432, 438, 119 S.Ct. 755, 760, 142 L.Ed.2d 881 (1999) (quotations & citation omitted). However, even when the plain meaning [does] not produce absurd results but merely an unreasonable one plainly at variance with the policy of the legislation as a whole this Court has [frequently] followed that purpose, rather than the literal words. United States v. Second Nat'l Bank, 502 F.2d 535, 541 (5th Cir.1974) (second brackets in original) (quotations & citations omitted). 7 The remedies section of the Franchise Act provides in relevant part that: 12 Notwithstanding the terms, provisions, or conditions of any dealer agreement or franchise or the terms or provisions of any waiver, and notwithstanding any other legal remedies available, any person who is injured in his business or property by a violation of this chapter by the commission of any unfair and deceptive trade practices, or because he refuses to accede to a proposal for an agreement which, if consummated, would be in violation of this chapter, may bring a civil action in a court of competent jurisdiction in this state to enjoin further violations, to recover the damages sustained by him together with the costs of the suit, including a reasonable attorney's fee. 13 § 8-20-11 (emphasis added). Appellants contend that the term any waiver should be construed liberally because the word any suggests that the Act encompasses a variety of waivers, including retrospective releases. Moreover, the remedial purpose of the statute requires that its terms be applied broadly. See, e.g., Ayers v. Wolfinbarger, 491 F.2d 8, 16 (5th Cir.1974). The Alabama legislature articulated the remedial nature of the statute as follows: 14 The legislature finds and declares that the distribution and sale of motor vehicles within this state vitally affect the general economy of the state and the public interest and the public welfare, and that in order to promote the public interest and the public welfare, and in the exercise of its police power, it is necessary to regulate motor vehicle manufacturers, distributors, dealers and their representatives and to regulate the dealings between manufacturers and distributors or wholesalers and their dealers in order to prevent fraud and other abuses upon the citizens of this state and to protect and preserve the investments and properties of the citizens of this state. 15 § 8-20-2; see Tittle v. Steel City Oldsmobile GMC Truck, Inc., 544 So.2d 883, 887 (Ala.1989). 16 KMA argues, however, that Alabama law expressly mandates that [a]ll receipts, releases and discharges in writing . . . must have effect according to their terms and the intentions of the parties thereto. Ala.Code § 12-21-109 (emphasis added); see Williams v. Nolin, 484 So.2d 428, 429 (Ala.1986); Jehle-Slauson Constr. Co. v. Hood-Rich, Architects & Consulting Eng'rs, 435 So.2d 716, 719-20 (Ala.1983). In addition, KMA claims that the [u]nfair and deceptive trade practices section of the Franchise Act, § 8-20-4, restricts the remedies outlined in the statute to dealers that have executed prospective releases. Section 8-20-4 states that: 17 Notwithstanding the terms, provisions, or conditions of any dealer agreement or franchise or the terms or provisions of any waiver, prior to the termination, cancellation, or nonrenewal of any dealer agreement or franchise, the following acts or conduct shall constitute unfair and deceptive trade practices: . . . . (3) For any manufacturer, factory branch, factory representative, distributor, or wholesaler, distributor branch or distributor representative: . . . . (m) To prospectively assent to a release, assignment, novation, waiver, or estoppel which would relieve any person from any liability or obligation under this chapter or to require any controversy between a new motor vehicle dealer and a manufacturer to be referred to any person other than the duly constituted courts of this state or the United States, if the referral would be binding on the new motor vehicle dealer. 18 § 8-20-4 (emphasis added). In other words, § 8-20-4(3)(m) limits the application of the term any waiver in § 8-20-11 to those situations where a manufacturer has induced a potential franchisee dealer to waive or release all future claims in the initial dealership agreement. Since there is no similar statutory reference to retrospective releases, KMA contends that the Court should enforce the Release according to its terms. 19 Taken together, § 8-20-11, § 8-20-4(3)(m), and the remedial purpose of the Franchise Act do not provide sufficient guidance to determine whether the Release should bar Appellants' claims against KMA. Under § 8-20-11, the term any waiver could be interpreted to include retrospective release agreements since the terms are often synonymous. Section 8-20-4(3)(m) provides no guidance on the issue of retrospective releases because the provision specifically applies to prospective waivers and releases, which are strictly prohibited in most franchise regulations as against public policy. See Schmitt-Norton Ford, Inc. v. Ford Motor Co., 524 F.Supp. 1099, 1105 (D.Minn.1981), aff'd, 685 F.2d 438 (8th Cir.1982); Sportique Motors, Ltd. v. Jaguar Cars, Inc., 195 F.Supp.2d 390, 395-96 (E.D.N.Y.2002), aff'd, 55 Fed.Appx. 580 (2d Cir.2003) (not in F.3d); A.J. Temple Marble & Tile, Inc. v. Union Carbide Marble Care, Inc., 162 Misc.2d 941, 618 N.Y.S.2d 155, 159 (N.Y.Sup.Ct.1994), aff'd, 214 A.D.2d 473, 625 N.Y.S.2d 904 (1995), aff'd, 87 N.Y.2d 574, 640 N.Y.S.2d 849, 663 N.E.2d 890 (N.Y.1996); Chase Manhattan Bank v. Clusiau Sales & Rental, Inc., 308 N.W.2d 490, 494 (Minn.1981); see also Redel's Inc. v. GE Co., 498 F.2d 95, 99 (5th Cir.1974). Furthermore, since § 8-20-4(3)(m) is not applicable to the facts of this case, it cannot be read to define the scope of § 8-20-11. Lastly, Alabama's general policy of enforcing release agreements pursuant to § 12-21-109 does not supercede the terms of the Franchise Act's specific legislative mandate. See, e.g., S. Natural Gas Co. v. Land, Cullman County, 197 F.3d 1368, 1373 (11th Cir.1999). 20 Although cases from other jurisdictions often enforce similar release agreements, in those instances the retrospective releases or good faith settlements are explicitly excepted from the purview of the franchise regulation in question. See Sportique Motors, Ltd., 195 F.Supp.2d at 392; Schmitt-Norton Ford, Inc., 524 F.Supp. at 1104-05. Unfortunately, there is no provision in the Franchise Act that instructs the Court as to whether a good faith retrospective release is enforceable or voidable. See §§ 8-20-11, 8-20-4(3)(m). The Court's review of the relevant provisions in the Alabama statute does not clarify whether the explicit prohibition of prospective releases under § 8-20-4(3)(m) clearly implies that retrospective releases lie beyond the purview of the Franchise Act. Therefore, we certify this question to the Alabama Supreme Court.