Opinion ID: 1579981
Heading Depth: 2
Heading Rank: 2

Heading: applying section 3.01's current version to the butnarus' claims

Text: Ford contends that section 3.01's current version grants the Board exclusive jurisdiction, and thus, the Board has the sole authority to make the initial determination about the alleged Code violation here. The Butnarus, on the other hand, argue that section 3.01 does not oust the trial court's jurisdiction because the Board does not have authority to award damages for their well-established common-law claims. Therefore, the Butnarus assert that the Board only has primary jurisdiction to decide whether Ford's right of first refusal violates the Code. The Butnarus' pleadings currently reflect four claims, the first two of which are based on Ford's allegedly violating the Code. First, the Butnarus seek a judicial declaration that Ford's right of first refusal violates the Code. Second, the Butnarus allege that Ford tortiously interfered with the purchase and sale agreements by attempting to exercise its allegedly invalid right of first refusal. Third, the Butnarus seek a declaration about the parties' rights and obligations under the purchase and sale agreements. Fourth, the Butnarus claim that Graf and Barton have breached or are about to breach the purchase and sale agreements by permitting Ford to exercise its right of first refusal rather than requiring Ford to determine the Butnarus' eligibility under the Code for the dealership transfer. The court of appeals, after analyzing section 3.01's former version, concluded that the Board has exclusive jurisdiction; however, it held that the Butnarus do not have standing as prospective car dealership transferees to seek relief from the Board for the Code violation they allege. The court of appeals further determined that the Butnarus' lack of standing to obtain relief from the Board did not give them a right to seek damages for the alleged Code violation in the trial court. 18 S.W.3d at 767-68. Accordingly, the court of appeals held that the Butnarus could maintain their breach of contract and tortious interference claims; however, the Butnarus could not base those causes of action on [Code] violations. 18 S.W.3d at 768. As discussed above, we disagree that section 3.01's former version granted the Board exclusive jurisdiction. But we conclude that section 3.01(a)'s current version, which applies here, grants the Board exclusive jurisdiction over issues and claims the Code governs. Thus, we must determine if the Butnarus' claims fall within the Board's exclusive jurisdiction. Because motor vehicle distribution and sales affects our State's economy and citizens' welfare, the Code's primary purpose is to insure a sound system of distributing and selling motor vehicles through licensing and regulating manufacturers ... and dealers of those vehicles. See Tex.Rev. Civ. Stat. art. 4413(36), § 1.02. To accomplish this, the Code strictly regulates conduct by or between franchise dealers and manufacturers. See TEX.REV.CIV. STAT. art. 4413(36), §§ 4.01-.07, 5.01-.05. For example, the Code establishes how a dealer must request a transfer, assignment, or sale of its franchise agreement. Tex.Rev. Civ. Stat. art. 4413(36), § 5.01B. Under that process, the Code also determines the circumstances under which a manufacturer may withhold its consent to the dealer's request. See TEX.REV.CIV. STAT. art. 4413(36), § 5.01B(c). Specifically, to transfer a dealership the dealer must file a written application with the manufacturer to transfer the dealership. The application must identify the prospective transferee and any pertinent agreements about the proposed transfer. See TEX.REV.CIV. STAT. art. 4413(36), § 5.01B(a)(1)-(4). The manufacturer must timely advise the dealer in writing if the prospective transferee is qualified or if the transferee is not acceptable. Tex.Rev.Civ. Stat. art. 4413(36), § 5.01B(b). The Code prohibits a manufacturer from unreasonably withholding its consent to a dealer's transfer application if the prospective transferee is of good moral character and otherwise meets the manufacturer's predetermined, written standards, if any, about a transferee's business experience and financial qualifications. Tex.Rev.Civ. Stat. art. 4413(36), § 5.01B(c). Further, the Code makes it unlawful for a manufacturer to fail to give effect to or attempt to prevent any sale or transfer of a dealership except as provided by Section 5.01B. TEX.REV.CIV. STAT. art. 4413(36), § 5.02(b)(8). Additionally, the Code provides a dealer a remedy if the manufacturer unreasonably denies a dealer's application to transfer its franchise ownership. The Code's definition of dealer includes licensed dealers but not prospective transferees. See Tex.Rev.Civ. Stat. art. 4413(36), § 1.03(7). The dealer may file a protest with the Board. Tex.Rev.Civ. Stat. art. 4413(36), § 5.01B(d). The issue would be whether the prospective transferee is qualified, and the manufacturer must prove the prospective transferee's inadequacy. Tex. Rev.Civ. Stat. art. 4413(36), §§ 5.01B(d)-(e). If the Board determines the prospective transferee is qualified, the Board shall enter an order reflecting this, and the manufacturer must accept the transfer. Tex.Rev.Civ. Stat. art. 4413(36), § 5.01B(e). Here, the court of appeals' analysis presumes that the Butnarus' trial court claims simply seek monetary damages based on their allegation that Ford's exercising its right of first refusal and denying the dealership transfer violated section 5.01B. But the Butnarus' trial court claims involve something different. The Butnarus seek relief for Ford's alleged tortious interference, and this claim, in turn, raises a Code construction issue. To establish their tortious interference claim, the Butnarus must show: (1) a contract exists between Graf, Graf Ford, Barton and the Butnarus; (2) Ford willfully and intentionally interfered with that contract; (3) the interference proximately caused the Butnarus damage; and (4) the Butnarus suffered actual damage or loss. See Texas Beef Cattle Co. v. Green, 921 S.W.2d 203, 210 (Tex.1996); Holloway v. Skinner, 898 S.W.2d 793, 795-96 (Tex.1995). But Ford may defeat liability by proving the affirmative defense that its conduct was privileged or justifiedso long as that conduct was not illegal or tortious. See Prudential Ins. Co. of Am. v. Financial Review Servs., Inc., 29 S.W.3d 74, 80 (Tex.2000); ACS Investors, Inc. v. McLaughlin, 943 S.W.2d 426, 431 (Tex.1997); Texas Beef Cattle, 921 S.W.2d at 210. It is the Butnarus' position that Ford does not have a justification defense, because rights of first refusal contravene certain Code provisions and, accordingly, are void and unenforceable. See Tex.Rev.Civ. Stat. art. 4413(36), § 5.01B(c) (prohibiting a manufacturer from unreasonably denying a dealership transfer); Tex.Rev.Civ. Stat. art. 4413(36), § 1.04 (making an agreement to waive the Code's terms void and unenforceable). The Butnarus also request that the trial court enter a declaratory judgment that rights of first refusal violate the Code. We conclude that the Butnarus' tortious interference and declaratory judgment claims fall outside the purview of the Board's exclusive jurisdiction. In David McDavid Nissan, we held that the Board's exclusive jurisdiction under section 3.01(a) required the dealer in that case to exhaust its administrative remedies to obtain a final Board finding to support its Code-based DTPA, bad faith, and oral contract claims. David McDavid Nissan, 84 S.W.3d at 226. In concluding that the Board's exclusive jurisdiction applied to the dealer's Code-based DTPA and bad-faith claims, we explained that the Code provides a hybrid claims-resolution process by which a dealer or manufacturer may seek damages for certain Code violations. David McDavid Nissan, 84 S.W.3d at 226 (discussing Tex.Rev.Civ. Stat. art. 4413(36), §§ 6.06(a), (e)). Based on this process, we held that the dealer had to exhaust its administrative remedies under the Code to obtain supporting Board findings before a trial court could finally adjudicate the dealer's damages request for its Code-based claims. See David McDavid Nissan, 84 S.W.3d at 227. Additionally, in requiring the dealer to obtain a Board finding before pursuing its oral contract claims, we relied on a Code provision mandating that a dealer obtain the Board's approval and a license before operating a franchise in a certain area. See David McDavid Nissan, 84 S.W.3d at 227 (discussing Tex.Rev.Civ. Stat. art. 4413(36), §§ 4.02(c), 4.06(a)-(e)). Here, however, no Code provision extends the Board's exclusive jurisdiction to resolving the Butnarus' tortious interference and declaratory judgment claims so that they must exhaust any administrative remedies before seeking judicial relief. In fact, the Code's failing to establish any procedure through which the Board may resolve a prospective transferee's claim that a manufacturer unlawfully refused to accept a dealer's transfer requestcoupled with the Board's inability to award monetary damagesdemonstrate the contrary. Thus, this case is analogous to Cash America, in which we held that the plaintiff did not have to exhaust administrative remedies under the Pawnshop Act because nothing in the statutory scheme indicate[d] that the Legislature intended to replace a pledgor's common-law remedies with the like-kind replacement remedy available under the statute. Cash Am., 35 S.W.3d at 18. Similarly, because the Code does not indicate the Legislature's intent to replace the prospective transferees' remedies here, the Butnarus do not have to exhaust any administrative remedies before suing Ford for tortious interference or declaratory relief. But our inquiry does not end here. Though the Legislature did not confer exclusive jurisdiction on the Board to resolve the Butnarus' claims, we still must decide whether the Board has primary jurisdiction to resolve the Code construction issue that those claims raise. See, e.g., Cash Am., 35 S.W.3d at 18 (recognizing that, though an agency does not have exclusive jurisdiction, the policies underlying the primary jurisdiction doctrine may require the agency to initially decide an issue). In David McDavid Nissan, we explained that the primary jurisdiction doctrine requires trial courts to allow an administrative agency to initially decide an issue when: (1) an agency is typically staffed with experts trained in handling the complex problems in the agency's purview; and (2) great benefit is derived from an agency's uniformly interpreting its laws, rules, and regulations, whereas courts and juries may reach different results under similar fact situations. David McDavid Nissan, 84 S.W.3d at 221 (citing United States v. Western Pac. R.R. Co., 352 U.S. 59, 64, 77 S.Ct. 161, 1 L.Ed.2d 126 (1956); Cash Am., 35 S.W.3d at 18; Foree v. Crown Cent. Petroleum Corp., 431 S.W.2d 312, 316 (Tex.1968); Gregg v. Delhi-Taylor Oil Corp., 162 Tex. 26, 344 S.W.2d 411, 413 (1961); Kavanaugh v. Underwriters Life Ins. Co., 231 S.W.2d 753, 755 (Tex.Civ. App.-Waco 1950, writ ref'd); Travis, Comment, Primary Jurisdiction: A General Theory and Its Application to the Securities Exchange Act, 63 Cal. L.Rev. 926, 927 (1975)). We noted that, when the primary jurisdiction doctrine requires a trial court to defer to an agency to make an initial determination, the court should abate the lawsuit and suspend finally adjudicating the claim until the agency has an opportunity to act on the matter. David McDavid Nissan, 84 S.W.3d at 221 (citing Central Power & Light Co. v. Public Util. Comm'n, 17 S.W.3d 780, 787 (Tex.App.-Austin 2000, pet. denied); Roberts Express, Inc. v. Expert Transp., Inc., 842 S.W.2d 766, 771 (Tex.App.-Dallas 1992, no writ)). We conclude that the primary jurisdiction doctrine applies in this case. The Butnarus' tortious interference and declaratory judgment claims raise a Code construction issue that is within the Board's special competence and expertise. See Cash Am., 35 S.W.3d at 18. As discussed above, the Legislature has specifically authorized the Board to resolve disputes between a manufacturer and dealer when the dealer alleges that the manufacturer violated section 5.01B by unreasonably withholding consent to transfer a dealership. See Tex.Rev.Civ. Stat. art. 4413(36), § 5.01B(d). The Board's expertise in construing section 5.01B in these disputes, and the State's interest in a uniform interpretation of the Code, requires the trial court to abate the lawsuit and suspend finally adjudicating the tortious interference and declaratory judgment claims until the Board has a reasonable opportunity to act on the matter. See David McDavid Nissan, 84 S.W.3d at 228; Central Power & Light, 17 S.W.3d at 787; Roberts Express, 842 S.W.2d at 771. Accordingly, the trial court should abate the claims pending the Board having an opportunity to exercise its primary jurisdiction to determine, at least in the first instance, whether a right of first refusal violates the Code. In sum, we hold that section 3.01(a) confers exclusive jurisdiction on the Board but only over issues and claims the Code governs. Here, the Code does not govern the Butnarus'as prospective transferees tortious interference and declaratory judgment claims. Consequently, the Butnarus do not have to exhaust any administrative remedies before raising these claims in the trial court. However, because these claims raise a Code construction issue, the primary jurisdiction doctrine requires the trial court to abate the claims pending the Board having a reasonable opportunity to determine whether a right of first refusal violates the Code.