Opinion ID: 591166
Heading Depth: 3
Heading Rank: 4

Heading: Delta's Third Party Beneficiary Claims Against Case

Text: 53 As noted earlier, the district court initially found Delta was entitled to seek enforcement of the obligations undertaken by Case to IH's dealers in section 5.2 of the Purchase Agreement between IH and Case, even though Case did not expressly assume the IH Dealership Agreements. When it denied motions by Case and IH for further summary judgment, the district court recognized the existence of a genuine issue of fact: whether Case had complied with its third party obligations undertaken in section 5.2 of the Purchase Agreement. But the court reiterated that, having ruled that Case did not assume the IH Dealership Agreements, Case was not bound by the conditions contained in those agreements concerning the grounds for termination of a dealer. On subsequent reconsideration, however, the district court--while continuing to maintain the position that Case was not bound by the termination provisions of the Dealer Agreement between IH and Delta--held that section 5.2 of the Purchase Agreement did constitute a third party beneficiary agreement under Delaware law. 54 In an effort to avoid third party beneficiary liability to Delta, Case insists here as it did in the district court that the express disavowal of third party beneficiary liability set forth in section 18.8 of the Purchase Agreement eschews a third party beneficiary result. The district court's rejection of that contention by Case is correct. The specific provisions of section 5.2 clearly create a third party beneficiary obligation running from Case to IH dealers like Delta, trumping the general language of section 18.8. 55 Nevertheless, the district court concluded that, as to Delta, Case was only obligated to offer one of the four alternative arrangements listed disjunctively in section 5.2(b): consolidation, relocation, purchase, or termination. The district court found that Case had first explored the third option (purchase) and had negotiated, presumably in good faith, to no avail; after which Case nevertheless chose to exercise the fourth option (termination). 56 Continuing, the district court recognized that, as Case had pursued termination, it was obligated under section 5.2(b) to see to it that Delta's termination was accomplished on terms at least as favorable as such dealer would be entitled to receive upon termination under [the Dealer Agreement with IH]. The district court observed that the termination provision requires consideration of § 30 of the Dealer Agreement between IH and Delta which, concluded the district court, sets out the minimum standard with which Case must comply. 57 Up to that point we have no disagreement with the district court's analysis. Our disagreement, and the point at which we find that the district court erred, is with its treatment of the § 30 standard as applicable equally to an unlawful termination (such as the termination of Delta's dealership arrangement here) and to a lawful termination with cause as specified in the Dealer Agreement, e.g., no longer distributing in the dealer's sales area or an active breach by the dealer which remains uncured. Clearly, the limited remedy of the dealer's right to have its inventory equipment and parts repurchased upon termination applies only to lawful termination, i.e., by mutual consent of IH and Delta, or by Delta unilaterally with or without cause, or by IH unilaterally with specified cause--none of which occurred here. The measure of the obligation of IH--and thus Case--when termination is a breach of the Dealer Agreement is entirely different: full compensatory damages. 58 As we hold today that the obligation of IH under such circumstances is to respond monetarily to Delta in compensatory damages for the losses it experienced as a result of having its Dealership Agreement breached by unlawful termination under section 5.2 of the Purchase Agreement, Case can be responsible to no lesser extent. We and the district court agree that Case expressly obligated itself under section 5.2(b), whether as a Delaware third party beneficiary contract or a Louisiana stipulation pour autrui, to treat IH dealers such as Delta no less favorably than IH would be required to treat Delta upon termination of the Dealer Agreement. It is inescapable therefore that Case's obligation to Delta is congruent with IH's obligation to Delta. The fact that, in the Purchase Contract between IH and Case (to which Delta and the other IH dealers were not parties), the four alternatives contemplated by IH and Case as covering for the various types of arrangements that Case might propose are enumerated expressly, is of no legal significance whatsoever as between IH and Delta or Case and Delta. Just as we have held IH and Case contractually obligated in solido to Delta for the losses it suffered when its right to sell and service IH agricultural parts and equipment was terminated by breach of contract, we hold, alternatively, that Case is obligated to Delta as a third party beneficiary to the same extent.