Court Opinion

ID: 2962103
Source: CourtListenerOpinion
Date Created: 2015-09-21 20:52:44.470109+00
Date Added: 2024-06-11T11:42:26.208787
License: Public Domain

USCA1 Opinion

	

                            United States Court of Appeals                            United States Court of Appeals                                For the First Circuit                                For the First Circuit                                 ____________________        No. 93-1034                        STEPHEN E. MCLANE, GENERAL PARTNER OF                        AUTO ENGINEERING LIMITED PARTNERSHIP,                                Plaintiff, Appellant,                                          v.                         MERCEDES-BENZ OF NORTH AMERICA, INC.                                Defendants, Appellees.        No. 93-1035                        STEPHEN E. MCLANE, GENERAL PARTNER OF                        AUTO ENGINEERING LIMITED PARTNERSHIP,                                 Plaintiff, Appellee,                                          v.                         MERCEDES-BENZ OF NORTH AMERICA, INC.                                Defendant, Appellant.                                 ____________________                    APPEALS FROM THE UNITED STATES DISTRICT COURT                          FOR THE DISTRICT OF MASSACHUSETTS                   [Hon. Douglas P. Woodlock, U.S. District Judge]                                              ___________________                                 ____________________                                        Before                            Cyr and Stahl, Circuit Judges,                                           ______________                             and Fuste,* District Judge.                                         ______________                                 ____________________            Alan  Garber, with whom  Clair A.  Carlson, Jr.,  Paul D. Boynton,            ____________             ______________________   _______________        and Mason  & Martin,  were on  brief  for Stephen  E. McLane,  General            _______________        Partner of Auto Engineering Limited Partnership.            Mark P. Szpak, with whom Daniel J.  Klau and Ropes & Gray, were on            _____________            _______________     ____________        brief for Mercedes-Benz of North America, Inc.            William N. Berkowitz, with whom Claudia V. Geschwind and  Bingham,            ____________________            ____________________      ________        Dana & Gould, were on brief for BMW of North America, Inc.        ____________                                 ____________________                                  September 7, 1993                                 ____________________        _____________________        *Of the District of Puerto Rico, sitting by designation.                      STAHL, Circuit Judge.  Appellant Stephen E. McLane,                             _____________            General  Partner  of  Auto  Engineering  Limited  Partnership            ("Auto   Engineering"),   challenges  the   district  court's            decisions  both   to  deny  his  motion   for  a  preliminary            injunction against BMW of  North America, Inc. ("BMW-NA") and            to grant his motion for the same for only ninety days against            Mercedes-Benz of North America,  Inc. ("MB-NA").  Finding his            appeal moot, we dismiss  and remand the case to  the district            court for such further proceedings as may be appropriate.                                          I.                                          I.                                          __                                      Background                                      Background                                      __________                      In September 1987, a consortium of investors led by            McLane formed  Auto Engineering for the  purpose of acquiring            the assets  of Auto Engineering,  Inc. ("AEI").   Among those            assets were Mercedes-Benz  and BMW  franchises, a  Lexington,            Massachusetts,  automobile dealership  facility out  of which            AEI  had   run  those   franchises,  and  real   property  in            Burlington,  Massachusetts, which was purchased as the future            location of  the Mercedes-Benz  dealership.  Having  acquired            AEI's assets,  Auto Engineering,  pursuant to  its dealership            agreements  with MB-NA,  moved its  Lexington-based Mercedes-            Benz  dealership  to  the   Burlington  location.    The  BMW            dealership  remained in  Lexington until  May 17,  1989, when            BMW-NA  acceded to  Auto  Engineering's request  to move  the            dealership to the Burlington premises.                                         -2-                                          2                      Unfortunately  for  Auto Engineering,  the  move to            Burlington   coincided  with  the   general  decline  in  the            Massachusetts and  national economies.   Decreased automobile            sales coupled with the high overhead costs of the  Burlington            facility   caused  Auto   Engineering  to   experience  heavy            financial losses.  According to Auto Engineering, it incurred            cumulative operating  losses in excess of  $4,000,000 between            the years of 1988 and 1992.                      By the middle of 1991, after  having unsuccessfully            applied  to   an  MB-NA  investment   program  for  financial            restructuring  assistance,  Auto Engineering  began exploring            the  possibility  of selling  the  Burlington  location.   In            November  1991,  Auto Engineering,  without  seeking approval            from  either franchisor,  entered  into a  purchase and  sale            agreement with Circuit City Stores, Inc. ("Circuit City") for            the   Burlington  premises.      Shortly   thereafter,   Auto            Engineering advised  MB-NA and BMW-NA that  it was proceeding            with plans to sell  the Burlington property and again  sought            permission  to  return  both  dealerships  to  the  Lexington            location.  Each company refused this request.                      In  September 1992,  Auto Engineering  learned that            Circuit City,  pursuant to  the purchase and  sale agreement,            would  require  it  to  vacate  the  Burlington  premises  by            November 2,  1992.  Accordingly,  on that  date, and  without            obtaining approval from  either franchisor, Auto  Engineering                                         -3-                                          3            moved both  dealerships back to Lexington.   Considering this            relocation  a breach of  the express terms  of the dealership            agreement, BMW-NA  notified Auto Engineering  by letter dated            November  3,  1992, that  it  was  terminating the  agreement            effective January  10, 1993.   The following day,  MB-NA sent            Auto Engineering a similar termination letter.1                      In  response to  these termination  letters, on  or            about December 10, 1992, McLane commenced an  action in state            court seeking  to enjoin  the termination of  the franchises.            The complaint alleged, inter alia, that  BMW-NA and MB-NA had                                   _____ ____            violated Mass.  Gen. L.  ch. 93B,    4(3)(e), by  terminating            their respective  dealer agreements "without good cause"2 and            sought injunctive relief, damages, and attorneys' fees.                      On December  18, 1992, with MB-NA's  assent, BMW-NA            removed  the action  to federal  court.   Shortly thereafter,            Auto  Engineering moved  for  a preliminary  injunction.   On                                            ____________________            1.  Auto Engineering's dealer agreements with BMW-NA and  MB-            NA contain clauses providing that the dealer must receive the            written approval of  the manufacturers before  relocating the            dealership to another site.            2.  Mass.  Gen. L. ch.  93B,   4(3)(e)  provides in pertinent            part:                      It   shall  be  deemed   a  violation  of                      paragraph  (a) of  section  three  for  a                      manufacturer, . .  . notwithstanding  any                      term  or  provision  of  a  franchise  or                      selling agreement, to cancel or terminate                      the franchise  or selling agreement  of a                      motor vehicle dealer without good cause .                      . . .                                         -4-                                          4            January  7, 1993, after a two-day hearing on that motion, the            district  court denied the motion as to BMW-NA but granted it            as to  MB-NA for a period  of ninety days, expiring  on April            11,  1993.3   The court also  denied Auto  Engineering's oral            request to stay the terminations pending appeal.  On  January            8, 1993, Auto  Engineering filed  a notice of  appeal and  an            expedited  motion requesting  that we  stay the  terminations            pending  appeal.4    On  that  date,  we  stayed  the  BMW-NA            termination for one week.  Subsequently, on January 15, 1993,            we  denied Auto  Engineering's emergency  request for  a stay            pending  appeal.  Accordingly,  by April 11,  1993, both BMW-            NA's  and MB-NA's  termination of  Auto  Engineering's dealer            agreements had become effective.                                         II.                                         II.                                         ___                                      Discussion                                      Discussion                                      __________                      Both BMW-NA  and  MB-NA contend  that, because  the            events which Auto Engineering sought  to enjoin have in  fact                                            ____________________            3.  Because MB-NA had not filed its dealer agreement with the            Attorney General's office as required under Mass. Gen. L. ch.            93B,    8, the court granted Auto Engineering's motion for an            injunction  against MB-NA  for a  period lasting  ninety days            from January 7, 1993, the date of MB-NA's compliance with the            filing requirement.            4.  MB-NA filed a cross-appeal and  a motion with this court,            seeking relief from the portion of the district court's order            that delayed the effective time of the MB-NA  termination for            ninety days.  Given that the ninety days have now passed, MB-            NA concedes that its cross-appeal is moot.                                         -5-                                          5            occurred, its appeal from  the district court's order denying            injunctive relief is moot.  We agree.                      It is well  settled that an appeal  from the denial            of  a motion  for a preliminary  injunction is  rendered moot            when the act  sought to be enjoined has occurred.  See, e.g.,                                                               ___  ____            Oakville  Dev. Corp.  v. FDIC,  986 F.2d  611, 613  (1st Cir.            ____________________     ____            1993)  ("When, as  will often  happen, the  act sought  to be            enjoined  actually  transpires, the  court may  thereafter be            unable to fashion [] meaningful [relief].  In such straitened            circumstances,  the appeal  becomes  moot.");  Railway  Labor                                                           ______________            Executives Ass'n v. Chesapeake W. Ry., 915 F.2d 116, 118 (4th            ________________    _________________            Cir. 1990) (similar),  cert. denied, 111 S.  Ct. 1312 (1991);                                   _____ ______            Garza  v.  Westergren,  908  F.2d  27,  29  (5th  Cir.  1990)            _____      __________            (similar); Gilpin v. American Fed'n  of State, County, & Mun.                       ______    ________________________________________            Employees, AFL-CIO, 875 F.2d 1310, 1313 (7th Cir.) (similar),            __________________            cert.  denied, 493 U.S. 917  (1989); Seafarers Int'l Union of            _____  ______                        ________________________            N.  Am. v. National Marine Servs., Inc., 820 F.2d 148, 151-52            _______    ____________________________            (5th  Cir.) (similar),  cert.  denied, 484  U.S. 953  (1987);                                    _____  ______            Marilyn T., Inc. v.  Evans, 803 F.2d 1383, 1384-85  (5th Cir.            ________________     _____            1986) (similar); In re Sewanee Land, Coal & Cattle, Inc., 735                             _______________________________________            F.2d 1294, 1295 (11th Cir. 1984) (similar).                      Auto Engineering attempts  to circumvent this  rule            by   reframing   its   request   for  relief   as   one   for            "reinstatement" of the franchise agreements.  This request is            not, however, properly before us.  The district court has not                                         -6-                                          6            yet ruled on the merits of Auto Engineering's claims, nor has            it  considered  such  fact-intensive  questions   as  whether            reinstatement would  be appropriate, or  even possible, under            the present  circumstances.  To the extent  that the district            court   has   addressed   the   post-termination   issue   of            reinstatement at all, it  has done so only in the  context of            ruling  on  Auto  Engineering's  request  for  a  preliminary            injunction.  Because the district court has  not yet resolved            ultimate issues of liability and permanent  equitable relief,            we decline to address  them prematurely in this interlocutory            appeal.5    Cf. Marilyn  T.,  803  F.2d  at 1384-85  (finding                        ___ ___________            appeal  moot   and  declining   to  order  reinstatement   of            appellant's   commercial  license   where  the   question  of            reinstatement would  require the  court to address  issues as            yet unresolved by the district court).                      The sole  issue on  appeal is the  district court's            denial  of  Auto  Engineering's  request  for  an  injunction            preventing BMW-NA  and  MB-NA  from  terminating  the  dealer            agreements.   As  both  of those  terminations have  actually            occurred, the appeal is moot.  Accordingly, we dismiss the                                                           dismiss                                                           _______                                            ____________________            5.  Needless to say, on remand, the district court  will take            such further  action with respect to  the reinstatement claim            as it deems appropriate.                                         -7-                                          7            appeal  and  remand  the  case for  any  further  appropriate                         remand                         ______            proceedings.6                                            ____________________            6.  As a general rule, when a case becomes moot on appeal, we            vacate  the  district  court's  decision and  remand  with  a            direction  to   dismiss.     See,  e.g.,  United   States  v.                                         ___   ____   _______________            Munsingwear,  Inc., 340  U.S.  36, 39  (1950); National  R.R.            __________________                             ______________            Passenger  Corp.  v.  International  Ass'n  of  Machinists  &            ________________      _______________________________________            Aerospace  Workers, 915 F.2d 43, 48 (1st  Cir. 1990).  In the            __________________            case of interlocutory appeals, however, "`the usual  practice            is  just to dismiss  the appeal  as moot  and not  vacate the            order appealed from.'" In re  Tax Refund Litigation, 915 F.2d                                   ____________________________            58,  59 (2d Cir. 1990) (quoting Gjertsen v. Board of Election                                            ________    _________________            Comm'rs,  751 F.2d  199,  202 (7th  Cir.  1984)).   See  also            _______                                             ___  ____            Marilyn T., 803 F.2d at 1385 (dismissing appeal and remanding            __________            for  further appropriate  proceedings where  district court's            order  was   "an  interlocutory  order  that   had  lost  its            effectiveness");   Gaylord   Broadcasting   Co.   v.   Cosmos                               ____________________________        ______            Broadcasting  Corp.,  746  F.2d  251,  254  (5th  Cir.  1984)            ___________________            (dismissing  appeal  and  remanding  case where  appeal  from            denial of preliminary injunction moot); 13A Wright, Miller, &            Cooper, Federal  Practice and  Procedure   3533.10  at 435-36                    ________________________________            (1984)  (recommending  dismissal  rather than  vacatur  where            appeal from interlocutory order is moot).                                                        -8-                                          8