Court Opinion

ID: 6333226
Source: CourtListenerOpinion
Date Created: 2022-04-20 15:03:17.473139+00
Date Added: 2024-06-11T09:23:26.564184
License: Public Domain

DISTRICT COURT OF APPEAL OF THE STATE OF FLORIDA
                             FOURTH DISTRICT

               PORSCHE CARS NORTH AMERICA, INC.,
                           Appellant,

                                     v.

        COPANS MOTORS INC., d/b/a CHAMPION PORSCHE,
                         Appellee.

                              No. 4D21-758

                             [April 20, 2022]

  Appeal from the Division of Administrative Hearings and the
Department of Highway Safety and Motor Vehicles; L.T. Case Nos. HSMV
MS-18-1677 and DOAH19-0177.

   Beverly A. Pohl of Nelson Mullins, Fort Lauderdale, and James Andrew
Bertron, Jr., of Nelson Mullins, Tallahassee, and Owen H. Smith and
Michael D. Educate of Barack Ferrazzano Kirschbaum & Nagelberg LLP,
Chicago, IL, for appellant.

   A. Edward Quinton, III, and Kenneth L. Paretti of Quinton & Paretti,
P.A., Miami, and Roy A. Diaz and Adam A. Diaz of Diaz Anselmo &
Associates, P.A., Plantation, for appellee.

GERBER, J.

    Porsche Cars North America, Inc. (“the licensee”) appeals from a
Department of Highway Safety and Motor Vehicles (“the Department”) final
order in favor of Copans Motors, Inc. d/b/a Champion Porsche (“the
dealer”). The Department’s final order adopted an administrative law
judge’s findings and concluded that the licensee’s reassignment of certain
zip codes within the dealer’s “primary area of responsibility” (“PAR”)
constituted a franchise modification, requiring the licensee to have
followed the notice and hearing procedures of the Florida Motor Vehicle
Dealer Act, sections 320.60–.70, Florida Statutes (2020) (“the Dealer Act”).

   On appeal, the licensee primarily argues the Department’s final order
conflicts with Recovery Racing, LLC v. Maserati North America, Inc., 261 So.
3d 600 (Fla. 4th DCA 2019). In Maserati, we held that the term “franchise”
in the Dealer Act refers to “the written contractual relationship” which
“defines the parameters of the franchise agreement between the parties.”
Id. at 604. Here, the licensee argues the zip codes were not expressly
stated within the parties’ franchise agreement, and therefore the zip codes
reassignment could not constitute a franchise modification.

   We agree with the licensee’s argument. Therefore, we reverse.

   We present this opinion in five parts:

   1. The factual background;
   2. The dealer’s protest petition;
   3. The licensee’s motion to dismiss;
   4. The administrative law judge’s findings adopted in the Department’s
      final order; and
   5. Our review.

                        1. The Factual Background

   In 2016, the parties executed a written dealer agreement. The written
dealer agreement includes: (1) a sales and service agreement; (2) standard
provisions; (3) operating standards; and (4) three addenda. The dealer
agreement contains a merger clause indicating the foregoing documents
constitute the parties’ entire agreement, and prohibiting modifications
unless contained in a writing signed by both parties.

   Regarding the PAR, the dealer agreement pertinently provides:

   •    “Dealer’s [PAR]” means the geographical area designated by
        [Licensee] in its sole discretion from time to time for
        Dealer’s Operations.

   •    [Licensee] at its discretion may designate Dealer’s [PAR]
        either in an Addendum to this Agreement or in a Notice of
        [PAR] delivered to Dealer from time to time in accordance
        with the provisions of this Agreement.

   •    This Agreement does not give Dealer any exclusive right to sell
        or service Authorized Products in any area or territory.

   •    [Licensee] reserves the right to appoint other dealers of
        Authorized Products, whether within Dealer’s [PAR] or
        elsewhere, as [Licensee] may determine to be necessary,
        appropriate, or desirable in order to achieve [Licensee’s] sales

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       and marketing plans or to provide proper levels of service to
       customers or prospective customers for Authorized Products.

   •   Dealer agrees to exert its best efforts to attain in Dealer’s [PAR]
       the best possible sales performance for Authorized Products[.]

   •   Dealer may sell Authorized Products outside Dealer’s [PAR],
       so long as all such sales are within the 50 United States. …

   However, nowhere does the dealer agreement designate the dealer’s
PAR by geographical area, zip codes, or any other manner. Further, the
dealer agreement does not express any intention to incorporate any
collateral document designating the dealer’s PAR. Instead, the licensee
provides its dealers with a “market master report” that includes a map by
which a dealer can view its then-designated PAR.

   Shortly after the parties executed the dealer agreement, the licensee
notified the dealer that the dealer’s designated PAR would include ninety-
one zip codes in the South Florida area.

   Two years later, the licensee notified the dealer that the licensee
intended to remove nine of the ninety-one zip codes from the dealer’s then-
designated PAR.

                     2. The Dealer’s Protest Petition

   In response, the dealer filed a petition with the Department protesting
the licensee’s removal of five of the nine zip codes from the dealer’s then-
designated PAR. The petition pertinently alleged:

          The establishment of a … dealer’s [PAR] is part of the
       contractual relationship between [the licensee] and the
       dealer …

          …

          [The licensee’s] modification of [the dealer’s] PAR
       constitutes an adverse modification to the Dealer Agreement[]
       in violation of Florida Statute §320.64(9)[,] … adversely alters
       the rights and obligations of [the dealer] under its existing
       Dealer Agreement[,] [and] substantially impairs the sales,
       service obligations, and investment of [the dealer].

          …

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         Additionally, in removing the [disputed] Zip Codes from
      [the dealer’s] PAR, [the licensee] modified the Dealer
      Agreement[] without following the procedures set forth in
      Florida Statute §320.641. [The dealer] seeks a declaration
      that [it] has declared [the licensee’s] PAR modification void as
      provided in Florida Statute §320.641(1)(b) and pursuant to
      [the dealer’s] declaration, [the] modification is void and of no
      force or effect.

(emphases added; paragraph numbering omitted).

   As seen above, the dealer’s protest petition relied upon sections
320.64(9) and 320.641, Florida Statutes (2020).     Section 320.64(9)
provides:

      A licensee is prohibited from … threaten[ing] to modify or
      replace, or ha[ving] modified or replaced, a franchise
      agreement with a succeeding franchise agreement which
      would adversely alter the rights or obligations of a motor
      vehicle dealer under an existing franchise agreement or which
      substantially impairs the sales, service obligations, or
      investment of the motor vehicle dealer.

§ 320.64(9), Fla. Stat. (2020).

   Section 320.641 pertinently provides:

      (1)(a) [A] … licensee shall give written notice to the motor
      vehicle dealer and the department … of the licensee’s
      intention to modify a franchise …, which modification … will
      adversely alter the rights or obligations of a motor vehicle
      dealer under an existing franchise agreement or will
      substantially impair the sales, service obligations, or
      investment of the motor vehicle dealer, at least 90 days before
      the effective date thereof, together with the specific grounds
      for such action.

      (b) The failure by the licensee to comply with the 90-day
      notice period and procedure prescribed herein shall render
      voidable, at the option of the motor vehicle dealer, any …
      modification … of any franchise agreement. …

      ….

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      (3) Any motor vehicle dealer who receives a notice of intent
      to … modify … may, within the 90-day notice period, file a
      petition … for a determination of whether such action is an
      unfair or prohibited … modification …. A modification … is
      unfair if it is not clearly permitted by the franchise agreement;
      is not undertaken in good faith; or is not undertaken for good
      cause. The … licensee shall have the burden of proof that
      such action is fair and not prohibited.

§ 320.641(1)(a)-(b), (3), Fla. Stat. (2020).

   The dealer’s protest petition requested the Department to make three
determinations:

      (1) … [The licensee] has failed to comply with the [90-] day
      notice period and procedure … and [the dealer] has effectively
      exercised its option to declare the PAR modification void and
      the Department finds that [the licensee’s] modification of [the
      dealer’s] PAR, seeking to eliminate the [subject] Zip Codes is
      void … [;]

      (2) [The licensee’s] modification of [the dealer’s] PAR is unfair
      and accordingly, of no force or effect[; and]

      (3) [The licensee’s] modification of [the dealer’s] PAR is
      prohibited and accordingly, of no force or effect.

                   3. The Licensee’s Motion to Dismiss

    The licensee filed a motion to dismiss the dealer’s protest petition. The
licensee’s motion to dismiss argued:

          Under [Maserati], [the licensee’s] change to [the dealer’s]
      PAR is not a “modification” of the franchise agreement unless
      it changed the terms of the parties’ existing written contract.
      … Here, the parties’ franchise agreement … according to its
      plain language (i) does not designate or assign any PAR to [the
      dealer], (ii) expressly states that [the dealer] has no exclusive
      right to sell or service [the licensee’s] vehicles in any particular
      geographic area or territory, and (iii) most importantly,
      expressly gives [the licensee] “sole discretion” to assign and
      adjust [the dealer’s] PAR “from time to time,” as [the licensee]
      sees fit. (emphasis added) ….             It simply cannot be a

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     modification of the existing Franchise Agreement for [the
     licensee] to change something that is not within the Franchise
     Agreement and that the Franchise Agreement expressly allows
     [the licensee] to change.

             4. The Administrative Law Judge’s Findings
               Adopted in the Department’s Final Order

   After a hearing, an administrative law judge issued the following
pertinent findings of fact and conclusions of law:

         [T]he PAR provides the basis for evaluating the
     effectiveness of a dealer’s performance in terms of its … sales
     in its assigned area, and … delineates the area within which
     a dealer may advertise and exclude the advertising of
     competing dealers. By these means, the PAR enables [the
     licensee] to police its dealers to ensure that they devote their
     efforts, not to unproductive intrabrand competition, but to
     maximizing … sales in their respective PARs. …

        ….

        Due to its central role in establishing enforceable
     obligations imposed upon the dealer by [the licensee], the
     PAR, as defined in the annual Market Master Report, is
     part of the contract between the parties ....

        [T]he … Dealer Agreement[] impose[s] PAR-based sales
     responsibilities on [the dealer]. The Standard Provisions
     imposes the duty on [the dealer] to use its best efforts to
     produce the best sales performance in its PAR. The Operating
     Standards imposes the duty on [the dealer] to maximize the
     sales potential of its PAR …. These provisions are substantial,
     enforceable duties or constituent elements of duties that go to
     the heart of the franchise agreement, and their enforcement
     necessitates the identification of the PAR.

        … At no time during their long association has either party
     ever had the slightest doubt as to the definition of [the
     dealer’s] PAR or its importance in their contract or the precise
     extent of the proposed modification; at bottom, [the
     licensee’s] posture in this case is attempting to shield
     from the Department’s regulatory jurisdiction the
     contractual provision defining the PAR.

                                    6
         ….

(emphases added; paragraph numbering deleted).

   The Department’s final order adopted those portions of the
administrative law judge’s findings of fact and conclusions of law quoted
above. The final order then declared void the licensee’s proposed franchise
agreement modification of certain zip codes pursuant to section
320.641(1)(b).

   The licensee’s appeal followed.

                              5. Our Review

   In Maserati, we set forth our standards of review:

         [T]his court reviews [an] administrative agency’s findings of
      fact to determine whether they are supported by competent,
      substantial evidence. This court will not substitute its
      judgment for that of the agency as to the weight of the
      evidence on any disputed finding of fact. [This court] review[s]
      the agency’s conclusions of law de novo.

261 So. 3d at 603. See also Dixon v. City of Jacksonville, 774 So. 3d 763,
765 (Fla. 1st DCA 2000) (“[T]he construction of statutes, … contracts, or
other written instruments is a question of law that is reviewable de novo
….”).

   Applying the foregoing standards of review to the instant case, we
reverse the Department’s final order. Our decision is controlled by
Maserati, which we examine in greater detail before explaining its
application here. We also will distinguish a Wisconsin case addressing the
same issue.

   a. Maserati

   In Maserati, two motor vehicle dealers were parties to franchise
agreements with Maserati which gave the dealers the non-exclusive right
to purchase vehicles and parts from Maserati at wholesale for resale to the
general public at their facilities. Id. at 601-02. The franchise agreements
expressly granted Maserati the right to set the invoice price for vehicles
and to do so “upon such terms and conditions as it may establish from
time to time.” Id. at 602. Under the franchise agreements, the dealers

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generated revenue on the sale (or lease) of Maserati vehicles based on: (1)
the retail price paid by customers; and (2) bonuses, rebates, incentives,
and other benefit programs offered by Maserati that were calculated or
paid on a per-vehicle basis (“Program Payments”). Id. The Program
Payments were not specified in the franchise agreements or any other
contractual arrangement between the parties. Id.

   For various business reasons, Maserati decided to replace its 2016
Program Payments with a new program (the “2017 program”). Id. Maserati
unveiled the 2017 program to its dealers at a national meeting ahead of
the new program’s implementation.       Id. A comprehensive PowerPoint
presentation explained the reasons behind the implementation of the 2017
program and detailed its elements. Dealers who did not attend the meeting
received a hard copy of the presentation by e-mail. Id.

   The two dealers referenced above challenged the 2017 program under
section 320.641, Florida Statutes (2017). Id. The dealers argued that
Maserati did not comply with section 320.641(1)(a)’s 90-day notice
requirement, so that the 2017 program was “voidable” at the dealers’
option pursuant to subsection 320.641(1)(b). Id.

   An administrative law judge ruled that although Maserati had
substantially complied with section 320.641(1)(a)’s 90-day notice
requirement (presumably through its advance dissemination of the 2017
program), the dealers were entitled to a fairness hearing under section
320.641(3). Id. The Department of Highway Safety and Motor Vehicles
adopted the administrative law judge’s recommended order as its final
order. Id.

   On appeal, Maserati contended that neither section 320.641’s 90-day
notice period nor its fairness hearing was required because the 2017
program did not modify the dealers’ franchise agreement. Id. We agreed
with the dealers’ argument, reasoning in pertinent part:

         For the purpose of section 320.641, the term “franchise
      agreement” is unambiguously defined as,

         a contract, franchise, new motor vehicle franchise, sales
         and service agreement, or dealer agreement or any other
         terminology used to describe the contractual
         relationship between a [licensee] ... and a motor vehicle
         dealer, pursuant to which the motor vehicle dealer is
         authorized to transact business pertaining to motor
         vehicles of a particular line-make.

                                    8
      § 320.60(1), Fla. Stat. (2017).

         As Maserati argues, for a [licensee’s] action to amount to a
      modification of a franchise, it must modify the contractual
      franchise relationship between the [licensee] and that dealer,
      not a policy or program external to the contract. …

         ….

         Only two provisions of the existing franchise agreements
      between Maserati and the dealers arguably relate to the
      policies implemented by the 2017 program. Those provisions
      establish the broad scope of Maserati’s business judgment in
      setting policies that apply to the dealers. One provision states
      that Maserati has the right to sell products to the dealers
      consistent with “reasonable policies and practices established
      from time to time” by Maserati. The other provides that
      Maserati may sell its vehicles to the dealers “at such prices
      and upon such terms and conditions as it may establish from
      time to time.”

         Nothing in the existing franchise agreement incorporates
      the 2016 program which the 2017 program replaced. Nothing
      in the existing franchise agreement addresses the details of
      the 2017 program …. The 2017 program does not modify the
      existing franchise agreement; its provisions fit within the
      ambit of Maserati’s discretion to establish policies and
      practices as set forth in that agreement.

         ….

         The Department erroneously concluded that “it is the
      broader, multi-faceted franchise business relationship,”
      rather than the written contractual relationship, “that defines
      the parameters of the franchise agreement between the
      parties.” In so doing, the Department impermissibly rewrote
      the plain language of subsections 320.60 and 320.641. The
      term “franchise” in subsection 320.641(1)(a) refers to a
      contractual relationship, not a “broader, multi-faceted
      business relationship.”

Id. at 603-04. Based on the foregoing reasoning, we remanded with
directions for the Department to dismiss the dealers’ petitions. Id. at 604.

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   b. Applying Maserati’s Reasoning Here

   Maserati’s reasoning applies equally here. Regarding the PAR, the
dealer agreement establishes the broad scope of the licensee’s business
judgment in designating the PAR from time to time:

   •   “Dealer’s [PAR]” means the geographical area designated by
       [Licensee] in its sole discretion from time to time for
       Dealer’s Operations.

   •   [Licensee] at its discretion may designate Dealer’s [PAR]
       either in an Addendum to this Agreement or in a Notice of
       [PAR] delivered to Dealer from time to time in accordance
       with the provisions of this Agreement.

   However, nowhere does the dealer agreement designate the dealer’s
PAR by geographical area, zip codes, or any other manner. Further, the
dealer agreement does not express any intention to incorporate any
collateral document designating the dealer’s PAR. See Kantner v. Boutin,
624 So. 2d 779, 781 (Fla. 4th DCA 1993) (“[T]here must be some
expression in the incorporating document ... of an intention to be bound
by the collateral document ....”). While the licensee’s market master
reports show the dealer’s designated PAR at any given time, those reports
are neither referenced in nor incorporated into the dealer agreement. In
other words, contrary to the administrative law judge’s findings and the
Department’s final order, those reports are not “part of the contract
between the parties.”

   Thus, the licensee’s removal of certain zip codes from the dealer’s then-
designated PAR did not modify the franchise agreement. Rather, the
removal was within the licensee’s “sole discretion” to designate the dealer’s
PAR “from time to time.” As the licensee aptly phrased in its motion to
dismiss the dealer’s protest petition:

          It simply cannot be a modification of the existing Franchise
       Agreement for [the licensee] to change something that is not
       within the Franchise Agreement and that the Franchise
       Agreement expressly allows [the licensee] to change.

          ….

         [J]ust as Maserati’s franchise agreements did not designate
       any particular pricing or payment structure for its dealers, the

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      Franchise Agreement [here] does not designate any particular
      territory for [the dealer’s] PAR. The Franchise Agreement thus
      could not be modified in any way by a change to [the dealer’s]
      PAR, because [the licensee’s] decision to change a PAR is
      within the ambit of its discretion expressly granted to it under
      the Franchise Agreement.

   c. Distinguishing a Wisconsin Case

   In reaching our decision, we distinguish a Wisconsin case, Racine
Harley-Davidson, Inc. v. Wis. Div. of Hrgs. & Appeals, 717 N.W.2d 184 (Wis.
2006), abrogated on other grounds, Tetra Tech EC, Inc. v. Wis. Dep’t of Rev.,
914 N.W.2d 21 (Wis. 2018), upon which the administrative law judge and
the Department relied in the final order.

     In Racine, the Wisconsin Supreme Court held that a motorcycle dealer’s
territory was “an essential aspect of [its] franchise relationship” with
Harley-Davidson, even though not contained in their written franchise
agreement. 717 N.W.2d at 206. The Racine court applied a “broad”
reading to the Wisconsin statute’s definition of such an agreement;
namely, as “encompassing the parties’ description of their franchise
relationship” beyond what was contained in their written contract. Id. at
206-07. However, the Racine court reasoned that the dealer’s assigned
territory should be deemed part of the parties’ broader “franchise
relationship” because the applicable Wisconsin statute: (i) required
licensees to designate in writing the territory assigned to a motor vehicle
dealer; (ii) allowed a licensee’s license to be denied, suspended, or revoked
if it had not designated in writing the territory assigned to a dealer; and
(iii) prohibited changes to dealers’ territories under certain circumstances.
Id. at 207. The Racine court further based its broad reading on “the
remedial purpose underlying the [Wisconsin] statute,” which “is designed
to protect ... dealers from unfair treatment by [licensees].” Id. at 208
(emphasis added).

   Here, however, as the licensee’s initial brief argues:

          Florida’s licensing statute is different. It expressly limits a
      “franchise agreement” to the parties’ contractual relationship.
      Although it requires a [licensee] to file a copy of its franchise
      agreement with [the department] (§ 320.63(3), Fla. Stat.), it
      does not require the licensee to designate dealer territories in
      the franchise agreement or otherwise. The Florida statute
      contains no provisions prohibiting changes to dealer
      territories. Nor does the Florida statute have [the] remedial

                                      11
      purpose [of protecting dealers].      …     Thus,       …   [the
      Department’s] … reliance on Racine is misplaced.

See also Maserati, 261 So. 3d at 603 n.2 (“We reject the dealers’ argument
that the intent of [the Dealer Act] is to protect dealers from powerful
[licensees]. Here, the legislature … has said nothing about protecting
dealers.”).

   To the extent the dealer here argues that Racine is the better-reasoned
decision over Maserati, or to the extent the administrative law judge and
the Department found the licensee was attempting to shield its PAR
designations from the Department’s regulatory jurisdiction, those points
essentially seek to rewrite either the Dealer Act, the arms-length
agreement between the dealer and the licensee, or both. We can do
neither. See Westphal v. City of St. Petersburg, 194 So. 3d 311, 313-14
(Fla. 2016) (“The judiciary … is without power to rewrite a plainly written
statute …”); Williams-Paris v. Joseph, 329 So. 3d 775, 783 (Fla. 4th DCA
2021) (“[T]he court’s task is to apply the parties’ contract as written, not
rewrite it under the guise of judicial construction.”) (internal quotation
marks and citation omitted).

                                Conclusion

    In sum, the licensee’s PAR changes, rather than modifying the dealer
agreement, are consistent with and implement the dealer agreement’s
express written terms, which give the licensee the right to designate the
PAR’s “geographical area … in its sole discretion from time to time.” Thus,
we reverse the Department’s final order, and remand for the Department
to enter a final order granting the licensee’s motion to dismiss the dealer’s
protest petition.

   Reversed and remanded with instructions.

CONNER, C.J., and KUNTZ, J., concur.

                            *        *         *

   Not final until disposition of timely filed motion for rehearing.

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