Court Opinion

ID: 9630238
Source: CourtListenerOpinion
Date Created: 2023-08-22 10:05:59.802026+00
Date Added: 2024-06-11T09:40:50.496250
License: Public Domain

KEM THOMPSON FROST, Justice,
concurring.
Under the parties’ agreement, the substantive law of Virginia governs their contract; however, Texas procedural law applies. Under Texas summary-judgment procedure, the trial court’s ruling is entitled to no deference; rather, this court conducts a de novo review and determines the issue as a matter of law.
Our task in this case is to determine if the parties’ agreement violates a Virginia statute, section 46.2-1537 of the Virginia Code, prohibiting certain solicitation and compensation in connection with the sale of motor vehicles. The trial court held the Advertising Agreement illegal under this statute and refused to enforce it. No Virginia court has addressed the issue, and it appears to be a question of first impression.
The Advertising Agreement between appellant AutoNation Direct.Com, Inc. (“Au-toNation”) and appellee BMW of Sterling (the “BMW Dealership”) essentially calls for AutoNation to provide advertising services to the BMW Dealership in consideration for fees. The contract provides for two forms of compensation: an $850 flat monthly fee for used-car referrals and a sliding scale referral fee (according to the number of sales leads provided) for new car referrals. Neither of the provisions give the BMW Dealership a financial interest in the sale of any motor vehicle. For this reason, neither provision violates section 46.2-1537.
Pointing to the plain language of section 46.2-1537, the BMW Dealership argues the Virginia statute prohibits the type of compensation structure prescribed by the Advertising Agreement. The majority concludes that “[cjonstruing the statute as suggested by appellant would prohibit all *476motor vehicle advertising in Virginia.”1 Nothing in the statute suggests the Virginia legislature intended to prohibit motor vehicle dealerships from advertising their products or from compensating advertisers for services rendered. What the Virginia legislature sought to prohibit was the compensation by dealers and licensed salespersons of any non-licensed “pecuniarily interested person” in sales transactions.
AutoNation is not a “pecuniarily interested person” within the meaning of the statute because AutoNation’s compensation is not dependent on the sale of any motor vehicle. Under the parties’ con-traet, AutoNation earns its fee for the referral of leads. AutoNation provides the names of potential buyers, and this service is complete at the point of referral. Auto-Nation is entitled to payment whether or not those leads ripen into sales. Likewise, if a solicitation for the sale of a motor vehicle comes to fruition as a result of an AutoNation referral, AutoNation is entitled to no payment, commission, or other compensation as a result of that sale. As such, AutoNation has no pecuniary interest in any sales transaction that might flow from its referrals. Because AutoNation’s compensation is not dependent upon or otherwise tied to any sale of a motor vehicle, the BMW Dealership’s payment for referrals is not “in connection with the sale of a motor vehicle” within the meaning of the statute.
Section 46.2-1537’s language is unambiguous and broad. The Virginia legislature intended to cast a wide net by enacting a sweeping prohibition against dealers and salespersons’ solicitation “directly or indirectly” of motor vehicle sales through pecuniarily interested persons, forbidding payment “in any form whatsoever ... in connection with the sale” to any unlicensed persons not employed by the dealer. See Va.Code Ann. § 46.2-1537 (West 2008). The structure and language of the parties’ contract strongly suggests the parties were aware of the prohibition in section 46.2-1537 and that they crafted their agreement to avoid a statutory violation by ensuring that AutoNation’s compensation was not tied, directly or indirectly, to the outcome of any transaction so that Auto-Nation would not be a “pecuniarily interested person” under the statute.
The majority holds that the statute prohibits compensation to an unlicensed person “when that person participates in the sale of a motor vehicle.”2 The legality of the transaction does not turn on participation in the sale. The key inquiry is not participation but the payee’s status as a “pecuniarily interested person.” For this reason, the focus should be on whether the recipient of the payment had a financial interest in the outcome of the sale transaction. In this case, AutoNation would not gain one iota from the BMW Dealership’s sale of any motor vehicle. Though clearly a participant in the advertising of motor vehicles offered for sale by the BMW Dealership, AutoNation had no financial stake in the outcome of any sale.
While no violation exists under the fact pattern presented in this appeal, it is not because it would be absurd to construe the statute as barring referrals; rather, it is because the BMW Dealership is not engaging in the prohibited activity of compensating a pecuniarily interested person who is not licensed. Under the fact pattern in this case, because AutoNation’s compensation is not dependent on the success or failure of its referrals or the ultimate sale of any vehicle, the BMW Dealership’s obligation to pay for advertising *477services under the parties’ agreement does not fall within the scope of the statutory prohibition. With no outcome-based component to the agreement, AutoNation cannot possibly have a pecuniary interest in any sales transaction that comes from its referrals. For this reason, the BMW Dealership did not establish, as a matter of law, that its contract with AutoNation •violates the Virginia statute. Therefore, summary judgment was improper.

. See ante at 474.

. See ante at 474.