Court Opinion

ID: 9670038
Source: CourtListenerOpinion
Date Created: 2023-08-24 03:13:01.731181+00
Date Added: 2024-06-11T18:16:01.972785
License: Public Domain

ANDERSON, RUSSELL A., Justice
(dissenting).
I respectfully dissent. To reach the conclusion that the dealership agreement requires River Valley to represent an OEM that offers Detroit Diesel engines, the majority ignores established principles of contract interpretation by (1) considering the sales and promotion responsibilities in the first paragraph of section 2.2.1 in isolation from the rest of the dealership agreement; (2) treating the failure to satisfy a conditional obligation as a breach; (3) rendering conditional language that specifically addresses a dealer’s representation of an OEM meaningless; and (4) resolving any conflict or ambiguity in the agreement against the dealer rather than the manufacturer that drafted the agreement. To reach the conclusion that Interstate may base its decision to terminate the dealership agreement on the actions of a third party, the majority disregards plain *163statutory language that prohibits a manufacturer from attempting to terminate a dealership agreement based on a circumstance beyond the dealer’s control, adds its own temporal qualifying language to the statute, renders the cure provision in the statute meaningless, and favors the manufacturer, Interstate, over the dealer, River Valley, whose interests the legislature was seeking to protect.
I.
I agree with the majority that the second paragraph of section 2.2.1 of the dealership agreement does not require River Valley to represent an OEM that offers Detroit Diesel engines. This paragraph provides:
If Dealer represents an OEM, Dealer shall promote the sale, and maintain in stock an appropriate number, of such OEM products equipped with Products.
Representation of an OEM is expressed as a condition in this paragraph, not as an absolute requirement. Because River Valley no longer represents an OEM, the conditional requirement of promoting the sale of OEM products equipped with Detroit Diesel engines has no application to River Valley.
I disagree, however, with the majority’s interpretation of the first paragraph of section 2.2.1, which provides:
Dealer shall actively and effectively promote the sale of Products and Parts to owners and users of Products and to other potential customers located in Dealer’s Area of Responsibility. Dealer shall also advertise and promote its Dealer Operations and shall participate in sales, service and parts promotional programs recommended by Distributor and shall utilize and display reasonable quantities of literature and materials promoting Products and Parts. Examining this paragraph “separately,” the majority concludes that River Valley cannot fulfill the intent of this paragraph without representing an OEM that offers Detroit Diesel engines. The majority’s interpretation effectively requires River Valley to represent an OEM so that it can promote the sale of new trucks equipped with Detroit Diesel engines, even though it acknowledges that other language in this same section that actually addresses a dealer’s representation of an OEM is merely conditional and “cannot reasonably be read as a requirement that the dealer represent an OEM.”
The majority’s construction of section 2.2.1 cannot be reconciled and violates basic rules of contract construction. “The cardinal purpose of construing a contract is to give effect to the intention of the parties as expressed in the language they used in drafting the whole contract.” Art Goebel, Inc. v. N. Suburban Agencies, Inc., 567 N.W.2d 511, 515 (Minn.1997). “We construe a contract as a whole and attempt to harmonize all clauses of the contract.” Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525 (Minn.1990). Phrases and sentences cannot be dissected and read separately and “out of context with the entire agreement.” Metro Office Parks Co. v. Control Data Corp., 295 Minn. 348, 352, 205 N.W.2d 121, 124 (1973). “Because of the presumption that the parties intended the language used to have effect, we will attempt to avoid an interpretation of the contract that would render a provision meaningless.” Chergosky, 463 N.W.2d at 526; see also Current Tech. Concepts, Inc. v. Irie Enters., Inc., 530 N.W.2d 539, 543 (Minn.1995) (“A contract must be interpreted in a way that gives all of its provisions meaning.”).
By using the conditional “if’ language in the second paragraph of section 2.2.1 — “If Dealer represents an OEM” — it seems *164clear that Interstate contemplated that there would be Detroit Diesel dealers that represent an OEM and Detroit Diesel dealers that do not represent an OEM.1 Consequently, by making the sales and promotion responsibilities in the first paragraph applicable to all dealers, not just those dealers that represent an OEM, Interstate must have intended that dealers could fulfill those responsibilities without representing an OEM. In fact, Interstate’s president testified at his deposition that he was not aware of any specific reason that River Valley could not continue to actively and effectively promote the sale of Detroit Diesel parts and replacement engines, either new or remanufactured, to current owners and users of Detroit Diesel engines. The “primary intent” of the dealership agreement, as stated in the agreement itself, is “to provide Product users with convenient and quality sales and service availability.” River Valley can fulfill this intent without representing an OEM that offers Detroit Diesel engines. River Valley can still sell Detroit Diesel parts and replacement engines to owners of trucks with Detroit Diesel engines, and River Valley can still perform warranty and other service work on trucks equipped with Detroit Diesel engines.2 Although River Valley can no longer promote the sale of new International trucks equipped with Detroit Diesel engines, the majority appears to acknowledge that these responsibilities, which are specifically described in the second paragraph of section 2.2.1, “fall out of the agreement! ] if the dealer does not represent an OEM that offers Detroit Diesel engines,” and the majority appears to agree that these responsibilities “no longer apply to River Valley.”
The majority makes no attempt to reconcile its conclusions that the first paragraph of section 2.2.1 requires dealers to represent an OEM and promote the sale of OEM products equipped with Detroit Diesel engines while the second paragraph— the paragraph that specifically addresses the representation of OEMs and the promotion of OEM products — does not. The majority tries to dodge the conflict by finding that “the parties intended the two paragraphs of section 2.2.1 to be independent of each other.” The two paragraphs may impose independent duties, but that is beside the point. The majority offers no explanation why the dealership agreement would contain two sets of duties — one set of “absolute contractual duties” under the first paragraph that apply to all dealers and one set of “conditional contractual duties” under the second paragraph that apply only to those dealers that represent an OEM — if the dealership agreement effectively requires all dealers to represent an OEM.
Further, the majority interprets the dealership agreement to provide that a dealer is in breach of the agreement any time the condition of representing an OEM *165is not met. The majority’s construction turns the failure to satisfy a conditional obligation into a breach of the agreement. Such an interpretation violates simple, established principles of contract construction. See 17A Am.Jur.2d Contracts § 459 (2004) (stating that the “nonoccurrence of a condition” is generally not a breach); Richard A. Lord, Williston on Contracts § 38:5 (4th ed.2000) (explaining the distinction between promises and conditions).
If Interstate actually had intended to require all dealers to represent an OEM, Interstate would not have offered a dealership agreement containing the conditional “if’ language, and the dealership agreement would not contain “conditional” duties relating to the sale and promotion of OEM products, which apply only to those dealers that represent an OEM. If “the sale of new trucks with Detroit Diesel engines is the life blood” of Interstate’s business, as the majority seems to have accepted, Interstate should have included it as a requirement in the dealership agreement. We are required to determine the meaning of “what is written in the instrument, not what was intended to be written.” Carl Bolander & Sons, Inc. v. United Stockyards Corp., 298 Minn. 428, 433, 215 N.W.2d 473, 476 (1974).3 •
By examining the language in the first paragraph of section 2.2.1 “separately,” the majority improperly dissects the first paragraph from the rest of the agreement. By interpreting the agreement as requiring all dealers to represent an OEM and requiring all dealers to promote the sale of OEM products, the majority renders the second paragraph of section 2.2.1 meaningless. There is no longer a condition or a conditional obligation relating to OEM representation and OEM sales — only a requirement and an absolute obligation. See Telex Corp. v. Data Prods. Corp., 271 Minn. 288, 293, 135 N.W.2d 681, 685 (1965) (noting that “[i]t is an elementary principle of law that a contract must be construed as a whole,” and “[t]he intention of the parties must be gathered from the entire instrument and not from isolated clauses”) (quotation omitted).
Even accepting the majority’s determination that “River Valley’s inability to sell new trucks with Detroit Diesel engines prevents it from ‘actively and effectively’ promoting the sale of such engines,” there is, at best, a conflict or ambiguity in the agreement, because the second paragraph only requires the dealer to promote the sale of OEM products equipped with Detroit Diesel engines if the dealer represents an OEM. Either way, the dealership agreement cannot reasonably be interpreted as requiring River Valley to represent an OEM.
*166When there is an apparent conflict in contract provisions, “contract construction compels us to determine that the more specific language takes precedence over the more general language.” Bank Midwest, Minn., Iowa, N.A. v. Lipetzky, 674 N.W.2d 176,181 n. 8 (Minn.2004). We also have noted “the well-established rule of construction that when a contract is open to two conflicting interpretations, the one more favorable to the party who did not draft the instrument should be adopted.” ICC Leasing Corp. v. Midwestern Mach. Co., 257 N.W.2d 551, 555 (Minn.1977). In this case, the agreement was Interstate’s, not River Valley’s. Therefore, the court must construe the agreement in favor of River Valley, and the court must give precedence to the second paragraph of section 2.2.1, which treats a dealer’s representation of an OEM as a condition and treats the sale and promotion of OEM products as a conditional responsibility.
The same result is reached if the dealership agreement contains ambiguous language. See Art Goebel, Inc., 567 N.W.2d at 515 (explaining that “[a] contract is ambiguous if, based upon its language alone, it is reasonably susceptible of more than one interpretation”). Although the interpretation of an ambiguous contract is ordinarily a question of fact for the jury, Denelsbeck v. Wells Fargo & Co., 666 N.W.2d 339, 346 (Minn.2003), in this case, the parties agreed that the district court could decide the issues summarily on the facts presented, without the need for a trial. Therefore, the court must construe any ambiguity in the contract language regarding the representation of an OEM and the promotion of the sale of OEM products in favor of River Valley. See Hilligoss v. Cargill, Inc., 649 N.W.2d 142, 148 (Minn.2002) (stating that “ambiguous contract terms must be construed against the drafter”).
I cannot interpret the dealership agreement to impose a requirement, let alone an essential requirement, on River Valley to promote the sale of OEM products when the agreement specifically uses conditional, not absolute, language with regard to that requirement. Accordingly, I conclude that Interstate has not established that River Valley failed to substantially comply with an essential requirement in the dealership agreement, and Interstate did not have “good cause” under HUEMDA to terminate the dealership agreements.
II.
I also disagree with the majority’s determination that Interstate can base its decision to terminate River Valley’s dealership agreements on International’s decision to stop offering Detroit Diesel engines where it is undisputed that River Valley had no control over International’s decision. Interstate has stipulated that it “made a decision not to renew International truck dealers as overhaul dealers after the end of 2002” “[a]s a result of International’s decision to drop the Detroit Diesel engine as an option on all new International trucks.” There is no evidence that River Valley played any role in International’s decision to discontinue offering Detroit Diesel engines. In fact, Interstate admits that many International dealers, including River Valley, unsuccessfully tried to persuade International to reverse its decision.
HUEMDA provides that an equipment manufacturer such as Interstate cannot “attempt or threaten to terminate” a “dealership agreement if the attempt or threat is based on the results of a natural disaster, a labor dispute, or other circumstance beyond the dealer’s control.” Minn.Stat. § 325E.0682(b)(4) (2004). HUEMDA also provides that the manufacturer’s notice of termination, cancellation, or nonrenewal of the dealership agreement “must provide *167that the dealer has until expiration of the notice period in which to cure a claimed deficiency.” Minn.Stat. § 325E.0681, subd. 2 (2004). “If the deficiency is rectified within the notice period, the notice is void.” Id.
The majority does not dispute that the actions of International that led to the termination of River Valley’s dealership agreements were outside the control of River Valley; however, the majority nonetheless concludes that International’s actions do not constitute a “circumstance beyond the dealer’s control” within the meaning of Minn.Stat. § 325E.0682(b)(4). To reach this conclusion, the majority interprets the statutory language “circumstance beyond the dealer’s control” to encompass only temporary circumstances and not “cireumstance[s] of a permanent or indefinite duration.” This interpretation has no support whatsoever in the plain language of the statute, the statutory scheme, or the purpose of HUEMDA.
“The object of all interpretation and construction of laws is to ascertain and effectuate the intention of the legislature.” Minn.Stat. § 645.16 (2004). If the legislature had intended to limit the “circumstances” in section 325E.0682(b)(4) to temporary circumstances, it easily could have included language to that effect. The legislature did not, and the rules of statutory construction forbid us from adding words to a statute. Genin v.1996 Mercury Marquis, 622 N.W.2d 114, 119 (Minn.2001). Further, this language is unworkable as a practical matter, because it often will be difficult to determine if the circumstance that threatens a dealership agreement involves only a “temporary inability to perform” or an indefinite or permanent inability to perform.
The majority’s interpretation of section 325E.0682(b)(4) also is inconsistent with the statutory scheme. If the reason for the manufacturer’s action relates to a circumstance beyond the dealer’s control— whether temporary or permanent — the dealer will have no meaningful opportunity to cure the claimed deficiency. This would render the cure provision “meaningless, in violation of the canon of statutory construction that each provision in a statute is to be given meaning.” MBNA Am. Bank, N.A. v. Comm’r of Revenue, 694 N.W.2d 778, 780 (Minn.2005); see Minn.Stat. § 645.16 (2004).4 In addition, the majority’s narrow construction of “circumstance beyond the dealer’s control” in section 325E.0682(b)(4) subverts the remedial “purpose of HUEMDA,” which is “to protect the dealer.” Astleford Equip. Co. v. Navistar Int’l Transp. Corp., 632 N.W.2d 182, 191 (Minn.2001) (noting that HUEM-DA was enacted to provide protection to heavy and utility equipment dealers with regard to their dealership agreements with heavy and utility equipment manufacturers, who have inherently superior economic power in the negotiation of dealership agreements).
The majority’s interpretation of HUEMDA relies heavily on the Wisconsin Supreme Court’s interpretation of the Wisconsin Fair Dealership Law. Like HUEMDA, the Wisconsin Fair Dealership Law requires “good cause” to terminate a dealership agreement. However, the majority fails to mention that the Minnesota statute is materially different from the *168Wisconsin statute in terms of defining “good cause.” Compare Minn.Stat. § 325E.0681, subd. 1, with Wis. Stat. § 135.02(4) (2004). The Wisconsin Fair Dealership Law measures good cause “by the dealer’s substantial compliance with requirements ‘imposed’ or ‘sought to be imposed by the grantor.’ ” Ziegler Co. v. Rexnord, Inc., 147 Wis.2d 308, 433 N.W.2d 8, 12 (1988) (quoting Wis. Stat. § 135.02(4)(a)). As the Wisconsin Supreme Court observed, “[t]he phrase ‘sought to be imposed’ suggests legislative recognition that the grantor has some ability to change the dealership — some right on the part of the grantor to change its method of doing business with its dealers.” Ziegler, 433 N.W.2d at 12. As the majority notes, Ziegler was decided one year before HUEMDA took effect in Minnesota, yet the Minnesota legislature chose not to pattern its definition of good cause on the Wisconsin statute. Instead, the legislature defined good cause as the dealer’s failure “to substantially comply with essential and reasonable requirements imposed upon the dealer by the dealership agreement,” without specifically recognizing the right of the equipment manufacturer to change dealership requirements. Minn.Stat. § 325E.0681, subd. 1.
In addition, the majority concludes that River Valley could comply with the dealership agreement by discontinuing its representation of International or by representing another OEM that offers Detroit Diesel engines. To begin with, although the court of appeals somehow came to the conclusion that “River Valley could comply with paragraph 2.2.1 by no longer representing International,” River Valley Truck Ctr., Inc. v. Interstate Cos., Inc., 680 N.W.2d 99, 105 (Minn.App.2004), Interstate never gave River Valley the option of discontinuing its relationship with International. Rather, Interstate informed River Valley that to avoid termination, it needed to “establish! ] a relationship with another OEM that sells DDC engines as part of its Product offering.” Further, discontinuing the relationship with International would not enable River Valley to satisfy the purported contractual “requirement” of selling new trucks equipped with Detroit Diesel engines. Even if Interstate had attempted to impose this condition, it would violate HUEMDA. See Minn.Stat. § 325E.0682(b)(2) (2004) (stating that it is a violation of HUEMDA for an equipment manufacturer to “coerce an equipment dealer into a refusal to purchase the equipment manufactured by another equipment manufacturer”). I also fail to see how interpreting HUEMDA to permit a manufacturer to terminate a dealership agreement because the dealer does not take an action that will immediately destroy its business — in this case, requiring an International truck dealer to no longer be an International truck dealer — serves the purpose of affording “ ‘the dealership the opportunity to react and protect itself.’ ” Astleford, 632 N.W.2d at 190 (quoting Jungbluth v. Hometown, Inc., 201 Wis.2d 320, 548 N.W.2d 519, 524 (1996)).
As for the option of representing another OEM that offers Detroit Diesel engines, the majority states that “even though River Valley could not control International, it did have the theoretical ability to return to compliance with the dealer agreements by securing another OEM.” The majority ignores the undisputed fact that securing another OEM was a practical impossibility for River Valley in the less than 90-day time frame that Interstate provided.5 In *169unimpeached and unrebutted affidavit testimony, the CEO of River Valley stated that River Valley attempted to obtain a second heavy-duty truck dealership that offered Detroit Diesel engines in new trucks, but no OEM was willing to appoint River Valley as a dealer. River Valley even attempted to obtain a dealership with an OEM that manufactures equipment incorporating Detroit Diesel engines, but no dealerships were available. Just as River Valley could not control International, it could not control other manufacturers. Therefore, compliance with the dealership agreement was not within River Valley’s control where the opportunity to cure the claimed deficiency was not within River Valley’s control.
The majority has distorted the language of the dealership agreement and the language of HUEMDA to reach the result that Interstate had “good cause” to terminate the dealership agreement. Perhaps this result makes sense from a policy perspective. However, it is not our role in this case to make policy. In enacting HUEMDA to protect dealers, the legislature already has weighed the policy considerations. In this case, our role is limited to basic contract construction and statutory interpretation. If the legislature believes that the result dictated by the contract and the statute in this case is not the right result, then the legislature can amend the statute accordingly and make it more like Wisconsin’s Fair Dealership Law. It is not for this court to incorporate a requirement into the dealership agreement that is stated merely as a condition or to add language to a statute to reach what the court believes is the best result. For these reasons, I would reverse the courts below and reinstate River Valley’s claims.

. The provision in section 2.2.1 is not an isolated reference to a dealer’s representation of an OEM. Other provisions of the agreement similarly use the conditional "if” language. For example, in addressing the training responsibilities of a Detroit Diesel dealer, the agreement states: "If Dealer represents an OEM, Dealer shall employ a sales force adequately trained regarding the essential sales features and application guidelines of Products used in OEM’s Products.” (Emphasis added.)

. For example, Interstate stipulated that Detroit Diesel “has never taken steps to prevent or discourage an on-highway Detroit Diesel distributor from selling Detroit Diesel engines (new or remanufactured) or replacement parts to a dealer for resale to owners and users of trucks equipped with Detroit Diesel engines but not produced or sold by the OEM(s) that the dealer represents.” Consequently, River Valley’s sales of Detroit Diesel engines are not necessarily restricted to International customers.

. As evidence of "the incapacitating effect” of International’s decision, the majority cites a March 27, 2002, sales meeting, where representatives of River Valley, International, and Cummins met with the owner of Schugel Trucking Company, and Schugel subsequently ordered 65 International trucks with Cum-mins engines from River Valley. However, faced with International’s decision to stop offering Detroit Diesel engines as an option in new trucks, River Valley had no choice but to sell trucks with engines by other manufacturers, as River Valley had done for years— including trucks sold to Schugel — with no complaints from Interstate. Although Interstate contends that the sale of new trucks is "critical to River Valley's right to maintain its International dealership,” Interstate did not even collect data regarding dealers’ sales of new trucks equipped with Detroit Diesel engines and before 2001 had never terminated a dealership agreement based on the dealer’s failure to sell an adequate number of trucks equipped with Detroit Diesel engines. Moreover, Interstate acknowledges that there are "many other” Detroit Diesel dealers in the southern Minnesota market. The next year, Schugel purchased 65 Freightliner trucks with Detroit Diesel engines.

. The "notice and right to cure provisions" do not apply if the reason for the termination, cancellation, or nonrenewal is for any reason set forth in section 325E.0681, subd. l(a)-(g). Minn.Stat. § 325E.0681, subd. 2. The majority agrees that "[n]one of these circumstances are involved here.” This provision demonstrates that the legislature knew how to limit the applicability of the cure provision. See Minn.Stat. § 645.19 (2004) ("Exceptions expressed in a law shall be construed to exclude all others.”).

. Interstate's initial notice of nonrenewal, dated November 18, 2002, did not provide 90 days’ prior written notice of the nonrenewal and did not "provide that the dealer has until *169expiration of the notice period in which to cure a claimed deficiency,” as required by HUEMDA under these circumstances. See Minn.Stat. § 325E.0681, subd. 2 (2004). In a subsequent letter from Interstate's counsel, dated December 10, 2002, Interstate extended the termination date to February 20, 2003, and indicated that “River Valley can cure its breach by establishing a relationship with another [original equipment manufacturer] that sells [Detroit Diesel] engines as part of its Product offerings.”