Court Opinion

ID: 4244760
Source: CourtListenerOpinion
Date Created: 2018-02-14 00:09:46.620067+00
Date Added: 2024-06-11T13:52:13.141278
License: Public Domain

02/13/2018

                                        DA 17-0284
                                                                                       Case Number: DA 17-0284

              IN THE SUPREME COURT OF THE STATE OF MONTANA

                                        2018 MT 24

RIMROCK CHRYSLER, INC.,

           Petitioner andAppellant,

     and

CHRYSLER GROUP, LLC,

           Franchisor,

     v.

STATE OF MONTANA DEPARTMENT OF
JUSTICE, MOTOR VEHICLE DIVISION,

     and

LITHIA MOTORS, INC., and its wholly
owned subsidiary, LITHIA OF BILLINGS, INC.,
d/b/a LITHIA CHRYSLER JEEP DODGE
OF BILLINGS,

           Respondents and Appellees.

APPEAL FROM:        District Court of the Thirteenth Judicial District,
                    In and For the County of Yellowstone, Cause No. DV 14-546
                    Honorable Ingrid G. Gustafson, Presiding Judge

COUNSEL OF RECORD:

             For Appellant:

                    Rodd A. Hamman, Calton Hamman & Wolff, PC, Billings, Montana

                    W. Scott Mitchell, Brianne C. McClafferty, Holland & Hart, Billings,
                    Montana
                    (Attorneys for Chrysler Group, LLC)

             For Appellees:

                    Timothy C. Fox, Montana Attorney General, Alan Joscelyn, Chief Assistant
                    Attorney General, A. Peter Funk, Assistant Attorney General, Helena,
                    Montana
                    (Attorneys for State of Montana)
         Robert Y. Weller II, Kristen L. Baiardi, Abbott Nicholson, PC, Detroit,
         Michigan

         Paul N. Tranel, Bohyer, Erickson, Beaudette & Tranel, PC, Missoula,
         Montana
         (Attorneys for Lithia Motors, Inc.)

                                      Submitted on Briefs: November 1, 2017

                                                  Decided: February 13, 2018

Filed:

         __________________________________________
                           Clerk

                                  2
Justice James Jeremiah Shea delivered the Opinion of the Court.

¶1     Petitioner Rimrock Chrysler, Inc. (“Rimrock”) appeals the April 5, 2017 Order by

the Thirteenth Judicial District Court, Yellowstone County, denying Rimrock’s petition for

judicial review. We address the following issue:

       Whether the District Court erred by denying Rimrock’s petition for judicial review.

¶2     We affirm.

                 PROCEDURAL AND FACTUAL BACKGROUND

¶3     In 2009, Chrysler, LLC, (“Old Chrysler”) filed for bankruptcy and received

substantial assistance from the federal government as part of the 2009 Troubled Asset

Relief Program (“TARP”). Old Chrysler was required to restructure its business model

and, as a condition of TARP assistance, terminated over 700 dealership agreements across

the United States. Among the dealership agreements terminated was Rimrock’s dealership

in Billings, which occurred in May 2009.

¶4     Old Chrysler sold most of its assets to Chrysler Group, LLC (“New Chrysler”). In

July 2009, New Chrysler awarded its Chrysler-Jeep franchise to Lithia Motors, Inc., and

Lithia of Billings, Inc. (collectively “Lithia”), which already held a Dodge franchise in

Billings, having acquired it in 2003 when Dodge was a division of Old Chrysler.

¶5     Congress enacted Section 747 of the Consolidation Appropriations Act of 2010 to

enable terminated dealerships to pursue private arbitration and determine whether they

should be offered a letter of intent from New Chrysler to be added to New Chrysler’s dealer

network. Rimrock successfully arbitrated under Section 747, and was awarded a letter of

intent by New Chrysler to establish a Chrysler-Jeep franchise in Billings. New Chrysler

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and Rimrock’s agreement proposed a Chrysler-Jeep franchise location less than a mile

from Lithia’s existing Chrysler-Jeep dealership.

¶6     On February 23, 2011, Lithia protested Rimrock’s proposed new dealership

pursuant to § 61-4-206, MCA. In April 2012, the Department of Justice Motor Vehicle

Division (“Department”) held a hearing on the matter. At the hearing, New Chrysler

advocated for Rimrock’s establishment as a dealer pursuant to its obligation to issue a usual

and customary letter of intent following Rimrock’s Section 747 arbitration award.

However, New Chrysler’s witness also testified that Rimrock’s proposed dealership was

not viable and that its proposed location, within a mile of an existing dealership, was

unprecedented. On June 26, 2012, the Hearing Examiner issued her Proposed Order on

Findings of Fact and Conclusions of Law, finding good cause did not exist to re-establish

Rimrock as a Chrysler-Jeep franchise in Billings as per § 61-4-205(2), MCA. In July 2012,

Rimrock and New Chrysler filed exceptions with the Department to the Hearing

Examiner’s Proposed Order. On March 13, 2014, after performing its own review and

analysis of the Hearing Examiner’s Proposed Order, the Department entered its Notice of

Adoption of Final Decision, and held: “[T]he Hearing Examiner’s Proposed Order on

Findings of Fact and Conclusions of Law is incorporated herein by reference in its entirety,

and is adopted as the Department’s Final Decision in this matter.”

¶7     In April 2014, Rimrock filed a Petition for Judicial Review with the Thirteenth

Judicial District Court, Yellowstone County. Lithia moved to dismiss Rimrock’s Petition,

and the District Court granted Lithia’s motion to dismiss. Rimrock appealed and we

reversed and remanded to the District Court for adjudication of Rimrock’s Petition.

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Rimrock Chrysler, Inc. v. Mont. Dep’t of Justice, Motor Vehicle Div., 2016 MT 165, 384
Mont. 76, 375 P.3d 392.

¶8     On remand, the District Court held that § 61-4-205(2), MCA, set forth a two-prong

test for establishing an additional dealership in any community in which the same

line-make is already represented. The prospective franchisor must show: (1) good cause

for an additional new motor vehicle dealership; and (2) the additional dealership is in the

public interest. In affirming the Department’s Final Decision, the District Court held New

Chrysler failed to meet its burden to show good cause existed to establish Rimrock as an

additional Chrysler-Jeep franchise in the Billings community.

                              STANDARDS OF REVIEW

¶9     We review agency decisions under the Montana Administrative Procedure Act,

which provides in pertinent part:

       (2) The court may not substitute its judgment for that of the agency as to the
       weight of the evidence on questions of fact. The court may affirm the
       decision of the agency or remand the case for further proceedings. The court
       may reverse or modify the decision if substantial rights of the appellant have
       been prejudiced because:
              (a) the administrative findings, inferences, conclusions, or decisions
              are:
                     (i) in violation of constitutional or statutory provisions;
                     (ii) in excess of the statutory authority of the agency;
                     (iii) made upon unlawful procedure;
                     (iv) affected by other error of law;
                     (v) clearly erroneous in view of the reliable, probative, and
                     substantial evidence on the whole record;
                     (vi) arbitrary or capricious or characterized by abuse of
                     discretion or clearly unwarranted exercise of discretion; or
              (b) findings of fact, upon issues essential to the decision, were not
              made although requested.

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Section 2-4-704(2), MCA; Blaine Cnty. v. Stricker, 2017 MT 80, ¶ 16, 387 Mont. 202,

394 P.3d 159. The same standards of review apply to both the District Court’s review of

the agency’s decision and our review of the District Court’s decision. Blaine Cnty., ¶ 16.

“A reviewing body’s standard on review ‘is not whether there is evidence to support

findings different from those made by the trier of fact, but whether substantial credible

evidence supports the trier’s findings.’” Blaine Cnty., ¶ 26 (quoting Schmidt v. Cook, 2005
MT 53, ¶ 31, 326 Mont. 202, 108 P.3d 511). In determining whether the findings are

clearly erroneous, we apply a three-part test: (1) does a review of the record demonstrate

substantial evidence supports the findings; (2) if substantial evidence supports the findings,

did the agency misapprehend the effect of this evidence; and (3) if substantial evidence

supports the findings and the agency did not misapprehend the effect of this evidence, does

a review of the record leave the court with a definite and firm conviction that a mistake has

been made. Mercer v. McGee, 2008 MT 374, ¶ 17, 346 Mont. 484, 197 P.3d 962.

                                      DISCUSSION

¶10    Whether the District Court erred by denying Rimrock’s petition for judicial review.

¶11    The purpose of the Montana Dealer Act, § 61-4-201, MCA, et seq., is to protect an

established Montana franchisee-dealer from the unequal bargaining power of an

automobile franchisor. State ex. Rel. Billings Chrysler-Plymouth, Inc. v. Dept. of Business

Regulations, No. 14597, 10, Or., 1979 Mont. LEXIS 804 (Mont. Jan. 23, 1979) (“The act

is obviously intended for the protection of Montana motor vehicle retail dealers who have

franchise agreements with motor vehicle manufacturers or distributors.”).

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¶12    The Act allows an existing franchisee to object to the establishment of a new or

additional motor vehicle dealership of the same line-make by filing a written objection with

the Department. Section 61-4-206(1)(a), MCA. Section 61-4-205(2), MCA, provides:

       A franchisor may not enter into a franchise for the purpose of establishing an
       additional new motor vehicle dealership in any community in which the same
       line-make is then represented unless there is good cause for an additional
       new motor vehicle dealership under a franchise and it is in the public interest.

Section 61-4-207(3), MCA, provides guidance for the Department to determine:

       whether good cause has been established for entering into an additional
       franchise for the same line-make[, and consider] the existing circumstances,
       including but not limited to:
              (a) amount of business transacted by other franchisees of the same
              line-make in that community;
              (b) investment necessarily made and obligations incurred by other
              franchisees of the same line-make in that community in the
              performance of their part of their franchises; and
              (c) whether the franchisees of the same line-make in that community
              are providing adequate consumer care, including satisfactory new
              motor vehicle dealer sales and service facilities, equipment, parts
              supply, and qualified management, sales, and service personnel, for
              the new motor vehicle products of the line-make.

The burden is on the franchisor to show that good cause exists to establish a new franchise

in the community. The existing franchisee is entitled to the statutory protections. Hi-Tech

Motors, Inc., v. Bombardier Motor Corp. of Am., 2005 MT 187, ¶ 17, 328 Mont. 66,

117 P.3d 159.

¶13    “If the language [of a statute] is plain, simple, direct and unambiguous, it does not

call for construction by the courts. It construes itself.” Fergus Motor Co. v. Sorenson, 73
Mont. 122, 126, 235 P. 422, 423 (1925). “We must endeavor to avoid a statutory

construction that renders any section of the statute superfluous or fails to give effect to all

                                              7
of the words used. It is blackletter law that in the construction of a statute, the office of a

judge is simply to ascertain and declare what is in terms or in substance contained therein,

not to omit what has been inserted or insert what has been omitted.” Mont. Trout Unlimited

v. Mont. Dep’t of Nat. Res. & Conservation, 2006 MT 72, ¶ 23, 331 Mont. 483, 133 P.3d
224 (internal citations omitted).

¶14    Rimrock argues the District Court fundamentally misapprehended the purpose of

the Montana Dealer Act. Rimrock contends that the analysis was overly protectionist and

makes it impossible to establish a new dealership. Rimrock also contends the District Court

erred by affirming the Department’s decision that limited the good cause determination to

only those statutorily enumerated factors in contradiction to the non-exhaustive list in

§ 61-4-207(3), MCA. Rimrock maintains the existing circumstances inquiry should

include the circumstances of the Billings community more generally, and that limiting the

analysis of existing circumstances to Lithia as the existing franchisee is too narrow a

construction of the good cause inquiry. Rimrock also asserts the Hearing Examiner failed

to consider facts regarding existing circumstances that constitute good cause in favor of

establishing Rimrock Chrysler-Jeep, such as market share, sales into and out of Billings,

Lithia’s profitability and return on sales, and the proposed Rimrock Chrysler-Jeep’s impact

on Lithia. Finally, Rimrock claims that many of the findings of fact were not supported by

substantial evidence and other relevant and undisputed facts were not considered that

would favor establishing a Rimrock franchise.

¶15    Lithia counters that the Montana Dealer Act compelled the Hearing Examiner to

make findings of fact on the specific statutory facts listed in § 61-4-207(3), MCA. Lithia

                                              8
notes that the District Court determined that the Hearing Examiner “did in fact go beyond

the factors set forth in 207(3)(a)–(c) and considered existing circumstances in the

community, contrary to Rimrock’s contention.” Lithia contends that the District Court

properly held the Hearing Examiner’s findings related to good cause are not clearly

erroneous and there was no indication a mistake was made or the law improperly applied.

We agree.

¶16    Section 61-4-205(2), MCA, requires that in order to establish an additional new

motor vehicle dealership in any community in which the same line-make is then

represented, the franchisor must demonstrate “there is good cause for an additional new

motor vehicle dealership under a franchise and it is in the public interest.” (Emphasis

added.) The District Court correctly summed this up: “[T]he issue actually boils down to

whether or not [New] Chrysler can prove it has good cause to add an additional same

line-make dealership in the Billings market and, then, whether it would be in the public

interest to do so.”

¶17    Although the specifically enumerated good cause factors set forth in § 61-4-207(3),

MCA, are not exhaustive, they are mandatory:

       In determining whether good cause has been established for entering into an
       additional franchise for the same line-make, the department shall take into
       consideration the existing circumstances, including but not limited to:
              (a) amount of business transacted by other franchisees of the same
              line-make in that community;
              (b) investment necessarily made and obligations incurred by other
              franchisees of the same line-make in that community in the
              performance of their part of their franchises; and
              (c) whether the franchisees of the same line-make in that community
              are providing adequate consumer care, including satisfactory new
              motor vehicle dealer sales and service facilities, equipment, parts

                                            9
             supply, and qualified management, sales, and service personnel, for
             the new motor vehicle products of the line-make.

(Emphasis added.)      Boiled down, the mandatory good cause factors require the

franchisor—New Chrysler—to establish that the existing franchisee—Lithia—is

underperforming or otherwise not fulfilling its obligations as a dealer to the community in

which it is located. New Chrysler’s own testimony established the contrary—that Lithia

is meeting or exceeding New Chrysler’s contractual expectations.

¶18   The District Court noted “not limited to” reflects the ability for a fact finder to

analyze factors beyond those set forth with specificity under § 61-4-207(3)(a)–(c), MCA.

However, this non-exhaustive list does not require the fact finder to go beyond those

enumerated factors with any specificity—otherwise those specifics would have been

enumerated. This is especially so when, based on her consideration of the mandatory

factors, the Hearing Examiner determined that the existing circumstances did not establish

good cause for adding a franchise for the same line-make.

¶19   The District Court held that when New Chrysler failed to prove Lithia was

underperforming and to show good cause existed to establish Rimrock as an additional

franchise, the Hearing Examiner was not required to continue and inquire into the second

“public interest” prong set forth in § 61-4-205, MCA. In construing two-prong tests in

which both prongs must be satisfied, we have held “if an insufficient showing is made

regarding one prong of the test, there is no need to address the other prong.” Whitlow v.

State, 2008 MT 140, ¶ 11, 343 Mont. 90, 183 P.3d 861. New Chrysler’s failure to meet its

                                            10
burden and show good cause to establish an additional franchise is dispositive and renders

an inquiry into the public interest unnecessary.

¶20    Contrary to Rimrock’s contention, the Hearing Examiner’s findings and conclusions

illustrates its decision is not based solely on a statutory protection that allowed Lithia to

exist as the only Chrysler-Jeep franchise without competition in Billings. The Hearing

Examiner made extensive findings of fact regarding the good cause factors pertaining to

Lithia as the existing franchisee, and we may not substitute our judgment for the

Department’s judgment regarding the weight of the evidence. Section 2-4-704(2), MCA;

Mercer, ¶ 17. A review of the record demonstrates substantial evidence supports the

Hearing Examiner’s findings; the Department did not misapprehend the effect of the

evidence; nor are we left with a definite and firm conviction that a mistake has been made.

Mercer, ¶ 17. The District Court correctly held the findings of fact were not clearly

erroneous and that there was no indication that a mistake has been made or the law was

improperly applied.

                                     CONCLUSION

¶21    The District Court did not err when it affirmed the Hearings Examiner’s Findings

of Fact and Conclusions of Law as adopted by the Department, and denied Rimrock’s

petition for judicial review. The District Court’s Order is affirmed.

                                                   /S/ JAMES JEREMIAH SHEA

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We Concur:

/S/ MIKE McGRATH
/S/ BETH BAKER
/S/ LAURIE McKINNON
/S/ JIM RICE

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